Is Cheniere Energy a Good Buy Ahead of Its Q4 Earnings?
Cheniere Energy LNG is slated to release fourth-quarter 2024 results on Feb. 20, before market open. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) and revenues is pegged at $2.69 per share and $4.4 billion, respectively.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The earnings estimates for the to-be-reported quarter have been revised downward by 1.8% over the past 30 days. The bottom-line projection indicates a decline of 53.3% from the year-ago reported number. The Zacks Consensus Estimate for quarterly revenues, meanwhile, suggests a year-over-year decrease of 8.7%.
For full-year 2024, the Zacks Consensus Estimate for Cheniere Energy’s revenues is pegged at $15.7 billion, implying a drop of 23.2% year over year. The consensus mark for 2024 EPS is pegged at $12.77, indicating a contraction of around 68.6%.
In the trailing four quarters, the Houston, TX-based gas exporter surpassed EPS estimates thrice and missed in the other, as reflected in the chart below.
Cheniere Energy, Inc. Price and EPS Surprise
Cheniere Energy, Inc. price-eps-surprise | Cheniere Energy, Inc. Quote
About Cheniere Energy & the Importance of LNG
Houston, TX-based Cheniere Energy, with the very appropriate ticker of LNG, is primarily engaged in the transportation of liquefied natural gas (or “LNG”).
With growing European and Asian demand, LNG is becoming an increasingly critical component of the global energy landscape. The United States has emerged as a dominant player, largely due to its vast natural gas resources and advanced infrastructure. LNG's role in enhancing energy security and supporting the transition to cleaner fuels cannot be overstated. Investors should know that LNG is natural gas cooled to a liquid state, making it significantly more compact for transportation and storage purposes.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Cheniere Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Cheniere Energy has an Earnings ESP of -0.07% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
What’s Shaping Q4 Results?
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.
LNG shipments for export from the United States have been robust for months on the back of environmental reasons, high prices of the super-chilled fuel elsewhere and the Russia-Ukraine conflict. This augurs well for Cheniere Energy — the dominant U.S. LNG exporter — in the to-be-reported quarter. In the third quarter of 2024, Cheniere Energy loaded 568 trillion British thermal units (TBtu) of LNG, up from 548 TBtu in the comparable period of 2023. We expect this uptick to have continued in the fourth quarter, supporting the company’s revenues and cash flows. The figure is estimated at 582 TBtu, according to the Zacks Consensus Estimate. Consequently, the consensus mark for Cheniere Energy’s LNG revenues is pegged at $4.2 billion.
However, on a bearish note, the increase in Cheniere Energy’s costs might have dampened its to-be-reported bottom line. In the previous three-month period, the company’s total operating expenses jumped 51% from the year-ago period. This uptrend is likely to have continued in the fourth quarter as well due to higher cost of sales.
Price Performance & Valuation
Cheniere Energy’s stock has climbed approximately 15% in the past six months, hitting a 52-week high of $257.65 earlier this year. It has outperformed the broader energy sector and outpaced energy storage and transportation peers like ONEOK, Inc. OKE and TC Energy TRP. The stock’s momentum highlights investor optimism, driven by Cheniere’s strategic growth initiatives, solid operational performance, and favorable market conditions.
LNG, OKE, TRP 6-Month Stock Performance
From a valuation standpoint, the Cheniere Energy stock doesn't appear attractive. In terms of the 12-month price/book ratio, shares are trading at 5.13, above its median of 4.70 and considerably higher than many of its peers. This overvaluation, confirmed by a Zacks Value Score of C, could deter value-focused investors, especially in an environment where capital-intensive projects like LNG terminals require significant reinvestment.
Assessing Cheniere’s Prospects: Hold the Stock
Cheniere Energy remains a dominant force in the global LNG market, benefiting from strong demand in Europe and Asia. The company’s production capacity stands at 45 million tons per annum (MTPA), with expansion efforts at Corpus Christi expected to push it to 55 MTPA. Financially, Cheniere has delivered impressive revenue growth, increased dividends, and repurchased shares aggressively. Additionally, its long-term contracts ensure stable cash flows, shielding it from price fluctuations.
However, the company faces headwinds. Rising natural gas prices could squeeze margins, while increasing global LNG competition — especially from Qatar — may limit growth opportunities. Long-term renewable energy adoption also poses risks to LNG demand. Moreover, the stock’s valuation appears stretched, trading at a price-to-book ratio above its historical median.
While Cheniere's financial strength and expansion plans are compelling, these challenges could pressure future performance.
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