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Cheniere (LNG) Up 9.8% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Cheniere Energy, Inc. (LNG - Free Report) . Shares have added about 9.8% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

First-Quarter 2017 Results

Cheniere Energy reported strong first-quarter results amid the commencement of three of its units at Sabine Pass - North America’s first large-scale liquefied gas export facility. The 2.6 billion cubic feet per day Sabine Pass terminal in Cameron Parish, Louisiana opened in Feb 2016.

The company’s net income per share came in at $0.23, contrary to the Zacks Consensus Estimate for a loss of $0.37. The Mar quarter profitability was also an improvement over the year-ago period when Cheniere Energy reported a loss.   

Revenues of $1,211 million dwarfed the Zacks Consensus Estimate of $811 million and the first-quarter 2016 sales of a mere $69 million. The top line surge led the company’s adjusted EBITDA to jump to $483 million compared to a loss of $45 million in the first quarter of 2016.

During the quarter, the company shipped 43 cargoes from Sabine Pass liquefied natural gas terminal in Louisiana, of which 7 were commissioning cargoes associated with Unit 3. Total volumes lifted in the Jan-Mar period were 154 trillion British thermal units.

Costs & Expenses

Overall costs and expenses soared 422% to $835 billion from the same quarter last year, mainly reflecting the commencement of operations at Sabine Pass liquefied natural gas terminal in Louisiana. Depreciation and amortization expense increased big time – from $24 million a year ago to $70 million now. However, SG&A costs fell 18 on the back of organizational changes and lower professional service fees.

Balance Sheet

As of Mar 31, 2017, Cheniere Energy had approximately $923 million in cash and cash equivalents and $24.1 billion in net long-term debt.

Guidance

Cheniere Energy reaffirmed its guidance for full-year 2017. While adjusted EBITDA is expected to be between $1.4 billion and $1.7 billion, distributable cash flow is likely to be between $500 million to $700 million ($2.10 to $2.80 per share).   

Progress Report

Cheniere Energy achieved a significant milestone in the first quarter with the substantial completion of Train 3. Train 4 is likely to be placed in service during the second half of this year. Altogether, Cheniere Energy intends to construct seven production units - five at Sabine Pass and two at the liquefaction and export terminal in Corpus Christi, TX.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

Cheniere Energy, Inc. Price and Consensus

 

Cheniere Energy, Inc. Price and Consensus | Cheniere Energy, Inc. Quote

VGM Scores

At this time, Cheniere's stock has a nice Growth Score of 'B', however its Momentum is lagging a lot with a 'F'.  The stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is solely suitable for growth investors.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.


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