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What Should You Do With Cheniere Energy (LNG) Pre Q1 Earnings?
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Natural gas exporter Cheniere Energy, Inc. (LNG - Free Report) is set to report first-quarter results on May 3. With shares pulling back in 2024 amid the fuel’s weakness, is the company a buy?
Let’s check that right now.
Company Description
Houston, TX-based Cheniere Energy Inc. is primarily engaged in businesses related to liquefied natural gas (or LNG). Being the first company to receive regulatory approval to export LNG from its 2.6 billion cubic feet per day Sabine Pass terminal, Cheniere Energy certainly enjoys a distinct competitive advantage. The company is primed for significant revenue and earnings growth on the back of solid operations and long-term contracts. Cheniere Energy’s gas supply deals for its Sabine Pass and Corpus Christi projects offer excellent cash flow visibility for the coming years.
Quarterly Projections & Earnings History
Following the softness in natural gas prices, Cheniere Energy is expected to post weaker Q1 results later in the week on Friday. Earnings are forecast to drop 65.9% to $2.35 a share from $6.89 a share in Q1 2023. Sales are projected to fall 43% to $4.2 billion.
However, the company has established an impressive earnings history. Last quarter, earnings per share came in more than double the expectations, beating the projection by 113.3%. As a matter of fact, Cheniere Energy beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, resulting in an earnings surprise of 64.7%, on average.
Our quantitative model suggests that the combination of the following two key elements — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — increases the odds of a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Cheniere Energy seems poised for an earnings beat as it carries a Zacks Rank of 3 and has an Earnings ESP of +6.61%. As it is, analysts have been quite enthusiastic for the quarter to be reported, with the $2.35 per share estimate being revised 2.2% higher in the last 7 days.
Factors to Consider for Q1
Cheniere Energy plays a pivotal role in the LNG market, demonstrated by its efficient terminals and robust demand. The company's terminals have consistently exceeded production capacity, showcasing its efficiency and indicating strong demand for Cheniere's natural gas. This underscores Cheniere's significance as a key player in meeting global LNG demand.
As proof of this, analysts project Cheniere Energy's revenues for the January-March period to be similar to the past couple of quarters, reflecting the stability and resilience of its contract-based business model despite market fluctuations.
On a bearish note, lower selling prices, especially in long-term contracts, are likely to have eroded profitability, as evident from the decline in LNG prices across all segments. Despite operational efficiency, sustained low prices could hamper revenue growth and investor confidence, warranting caution amidst volatile market conditions.
Lackluster Recent Stock Performance
Cheniere Energy's stock performance in 2024 has been disappointing. This year, the stock is down 7.6% compared to the S&P 500’s gain of 6.1% and the Energy sector's gain of 7.5%. The underperformance may signal investor concerns regarding potential impacts of the Biden Administration's pause on LNG export approvals and the ongoing supply glut issues in the natural gas market. But over the last three years, Cheniere Energy’s stock has skyrocketed 100%, with the company rebounding well from the pandemic.
Image Source: Zacks Investment Research
Bottom Line
Considering the aforementioned factors, we believe investors should proceed with caution heading into the first quarter earnings announcement. Moreover, shares are not cheap on a valuation basis and investors will pay a premium for the growth. Cheniere Energy trades with a forward P/S of 2.19, which is higher than the five-year median of 1.58. A P/S ratio under 1.0 indicates value.
In other words, we wouldn't recommend buying Cheniere Energy stock until it delivers a superior operational performance in the upcoming release.
3 Energy Stocks to Consider as Earnings Approach
Here are some energy firms that you may want to consider on the basis of our model:
ConocoPhillips (COP - Free Report) has an Earnings ESP of +2.85% and a Zacks Rank #2 (Buy). The firm is scheduled to release earnings on May 2.
ConocoPhillips beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 8.5%, on average. Valued at around $153.2 billion, COP has gone up 27% in a year.
EOG Resources (EOG - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #2. The firm is scheduled to release earnings on May 2.
The 2024 Zacks Consensus Estimate for EOG Resources indicates 5.2% year-over-year earnings per share growth. Valued at around $78.1 billion, EOG has gained 14.4% in a year.
TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +0.76% and a Zacks Rank #3. The firm is scheduled to release earnings on May 3.
TC Energy beat the Zacks Consensus Estimate for earnings in two of the last four quarters, missed once and met in the other. It has a trailing four-quarter earnings surprise of roughly 7.1%, on average. Valued at around $36.1 billion, TRP has lost 13.2% in a year.
Image: Bigstock
What Should You Do With Cheniere Energy (LNG) Pre Q1 Earnings?
Natural gas exporter Cheniere Energy, Inc. (LNG - Free Report) is set to report first-quarter results on May 3. With shares pulling back in 2024 amid the fuel’s weakness, is the company a buy?
Let’s check that right now.
Company Description
Houston, TX-based Cheniere Energy Inc. is primarily engaged in businesses related to liquefied natural gas (or LNG). Being the first company to receive regulatory approval to export LNG from its 2.6 billion cubic feet per day Sabine Pass terminal, Cheniere Energy certainly enjoys a distinct competitive advantage. The company is primed for significant revenue and earnings growth on the back of solid operations and long-term contracts. Cheniere Energy’s gas supply deals for its Sabine Pass and Corpus Christi projects offer excellent cash flow visibility for the coming years.
Quarterly Projections & Earnings History
Following the softness in natural gas prices, Cheniere Energy is expected to post weaker Q1 results later in the week on Friday. Earnings are forecast to drop 65.9% to $2.35 a share from $6.89 a share in Q1 2023. Sales are projected to fall 43% to $4.2 billion.
However, the company has established an impressive earnings history. Last quarter, earnings per share came in more than double the expectations, beating the projection by 113.3%. As a matter of fact, Cheniere Energy beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, resulting in an earnings surprise of 64.7%, on average.
Cheniere Energy, Inc. Price and EPS Surprise
Cheniere Energy, Inc. price-eps-surprise | Cheniere Energy, Inc. Quote
What Does the Zacks Model Say?
Our quantitative model suggests that the combination of the following two key elements — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — increases the odds of a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Cheniere Energy seems poised for an earnings beat as it carries a Zacks Rank of 3 and has an Earnings ESP of +6.61%. As it is, analysts have been quite enthusiastic for the quarter to be reported, with the $2.35 per share estimate being revised 2.2% higher in the last 7 days.
Factors to Consider for Q1
Cheniere Energy plays a pivotal role in the LNG market, demonstrated by its efficient terminals and robust demand. The company's terminals have consistently exceeded production capacity, showcasing its efficiency and indicating strong demand for Cheniere's natural gas. This underscores Cheniere's significance as a key player in meeting global LNG demand.
As proof of this, analysts project Cheniere Energy's revenues for the January-March period to be similar to the past couple of quarters, reflecting the stability and resilience of its contract-based business model despite market fluctuations.
On a bearish note, lower selling prices, especially in long-term contracts, are likely to have eroded profitability, as evident from the decline in LNG prices across all segments. Despite operational efficiency, sustained low prices could hamper revenue growth and investor confidence, warranting caution amidst volatile market conditions.
Lackluster Recent Stock Performance
Cheniere Energy's stock performance in 2024 has been disappointing. This year, the stock is down 7.6% compared to the S&P 500’s gain of 6.1% and the Energy sector's gain of 7.5%. The underperformance may signal investor concerns regarding potential impacts of the Biden Administration's pause on LNG export approvals and the ongoing supply glut issues in the natural gas market. But over the last three years, Cheniere Energy’s stock has skyrocketed 100%, with the company rebounding well from the pandemic.
Image Source: Zacks Investment Research
Bottom Line
Considering the aforementioned factors, we believe investors should proceed with caution heading into the first quarter earnings announcement. Moreover, shares are not cheap on a valuation basis and investors will pay a premium for the growth. Cheniere Energy trades with a forward P/S of 2.19, which is higher than the five-year median of 1.58. A P/S ratio under 1.0 indicates value.
In other words, we wouldn't recommend buying Cheniere Energy stock until it delivers a superior operational performance in the upcoming release.
3 Energy Stocks to Consider as Earnings Approach
Here are some energy firms that you may want to consider on the basis of our model:
ConocoPhillips (COP - Free Report) has an Earnings ESP of +2.85% and a Zacks Rank #2 (Buy). The firm is scheduled to release earnings on May 2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
ConocoPhillips beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 8.5%, on average. Valued at around $153.2 billion, COP has gone up 27% in a year.
EOG Resources (EOG - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #2. The firm is scheduled to release earnings on May 2.
The 2024 Zacks Consensus Estimate for EOG Resources indicates 5.2% year-over-year earnings per share growth. Valued at around $78.1 billion, EOG has gained 14.4% in a year.
TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +0.76% and a Zacks Rank #3. The firm is scheduled to release earnings on May 3.
TC Energy beat the Zacks Consensus Estimate for earnings in two of the last four quarters, missed once and met in the other. It has a trailing four-quarter earnings surprise of roughly 7.1%, on average. Valued at around $36.1 billion, TRP has lost 13.2% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.