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Cheniere Energy Partners, LP (CQP) Up 2.3% Since Last Earnings Report: Can It Continue?

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Zacks Equity Research
·4 min read
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A month has gone by since the last earnings report for Cheniere Energy Partners, LP (CQP). Shares have added about 2.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cheniere Energy Partners, LP 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.

Cheniere Partners Beats Q4 Earnings & Revenues

Cheniere Energy Partners reported fourth-quarter 2020 earnings per unit of 77 cents, beating the Zacks Consensus Estimate of 68 cents. However, the earnings figure declined from 87 cents per unit in the year-ago period.

Revenues of $1,997 million were higher than the year-ago level of $1,908 million and beat the Zacks Consensus Estimate of $1,741 million.

The better-than-expected quarterly results were supported by accelerated revenue recognition and additional Trains in operation. Moreover, higher LNG cargoes sold in the quarter boosted the results. The positives were partially offset by lower total margins.

Distribution Hike

The partnership increased quarterly cash distribution from 65 cents per unit to 65.50 cents. The distribution hike amid the current market volatility is expected to send a strong signal to investors about its operational strength.

Operations

The partnership sent 89 cargoes in the fourth quarter, down from 95 in the year-ago period. Total LNG volumes loaded in the quarter was recorded at 318 trillion British thermal units (TBtu), lower than the year-ago level of 335 TBtu.

Adjusted EBITDA for the fourth quarter was recorded at $772 million, up from the year-ago level of $766 million. Profits increased in the fourth quarter on the back of accelerated revenue recognition. Additional Trains in operation also boosted profits. Notably, Cheniere Partners recognized $40 million in revenues from cancelled cargoes.

Costs and Expenses

Cost of sales for the quarter was $954 million, up from the year-ago period’s $873 million. Operating and maintenance expenses increased to $166 million from $160 million in fourth-quarter 2019. Total costs and expenses for the quarter were recorded at $1,372 million, significantly up from $1,232 million in the December quarter of 2019. 

Cash Flow

The partnership generated operating cash flow of $418 million for fourth-quarter 2020, lower than the year-ago level of $570 million.

Balance Sheet

As of Dec 31, 2020, the partnership had only $1,210 million in cash and cash equivalents, down from $1,254 million at third quarter-end. Cheniere Partners had a net long-term debt of $17,580 million, higher than $17,573 million in the third quarter. It had a massive debt to capitalization of 97%.

Guidance

The partnership reiterated its full-year 2021 guidance for distribution per unit in the range of $2.60-$2.70, indicating an increase from the 2020 figure of $2.59. The partnership expects current distributable cash flow per unit in the range of $3.75-$3.95.

The SPL Project Train 6 was 77.6% complete at fourth quarter-end. Full work on the train is expected to be completed by second-half 2022.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, Cheniere Energy Partners, LP has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cheniere Energy Partners, LP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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