A month has gone by since the last earnings report for Cheniere Energy, Inc. (LNG - Free Report) . Shares have added about 13% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is LNG 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 2018 Results
Cheniere Energy reported strong first-quarter 2018 results on robust production volumes and strong pricing. The company’s net income per share came in at $1.18, significantly beating the Zacks Consensus Estimate of 62 cents and the comparable year-ago profit of 23 cents.
The U.S. gas exporter’s quarterly revenues jumped to $2,242 million from $1,211 million recorded in the year-ago quarter, reflecting a massive jump of 85%. The top-line surge led to the generation of $907 million in adjusted EBITDA compared with $483 million in first-quarter 2017. Further, revenues also surpassed the Zacks Consensus Estimate of $1,519 million.
During the quarter, the company shipped 67 cargoes from the Sabine Pass liquefied natural gas terminal in Louisiana, reflecting an increase of 55.8%. Total volumes of LNG exported in the reported quarter were 244 trillion British thermal units (TBtu) compared with 152 TBtu in the year-ago quarter.
Costs & Expenses
Overall costs and expenses soared 79% to $1,495 million from the same quarter last year. The increase is mainly attributed to higher cost of sales that jumped to $1,178 million compared with $624 million in the prior-year quarter, and the rise in operating and maintenance expenses by 79.5% year over year to $140 million. Depreciation and amortization expenses also increased from $70 million a year ago to $109 million in the reported quarter.
As of Mar 31, 2018, Cheniere Energy had approximately $715 million in cash and cash equivalents and $25,656 million in net long-term debt. The debt-to-capitalization ratio of the company stands at more than 93%.
Cheniere Energy raised its EBITDA guidance for full-year 2018, following the better-than-expected profit. The upbeat forecast reflects higher-than-anticipated realized margins on marketing volumes. Adjusted EBITDA is now expected to be between $2,300 million and $2,500 million compared with the prior guidance ranging $2,000-$2,200 million. The distributable cash flow is likely to be between $350 million and $550 million, up from the prior guided range of $200-$400 million.
Sabine Pass Liquefaction Project (SPL): Sabine Pass is North America’s first large-scale liquefied gas export facility. Altogether, Cheniere Energy intends to construct up to six trains at Sabine Pass, with each train expected to have a capacity of about 4.5 million tons per annum (Mtpa). While Trains 1, 2, 3 and 4 are functional; Train 5 is under construction and expected to begin exporting in the second half of 2019. Train 6 is being commercialized and has secured the necessary regulatory approvals.
Corpus Christi Liquefaction Project (CCL): Cheniere Energy’s Corpus Christi LNG project, under which the company intends to develop three trains, is also expected to come online in 2019. Trains 1 and 2 are under construction, while Train 3 is being commercialized and has the necessary approvals in place. The company is expected to make its final investment decision regarding Train 3 by the end of the first half of this year.
Corpus Christi Expansion Project: Cheniere Energy intends to develop seven midscale liquefaction trains adjacent to the CCL Project. The company has also initiated the regulatory approval process regarding the same. The total production capacities for these trains are expected to be approximately 9.5 Mtpa.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been three revisions higher for the current quarter compared to three lower.
At this time, LNG has a strong Growth Score of A and a grade with the same score on the momentum front. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
LNG has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.