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What to Look for in Cheniere Energy's (LNG) Q3 Earnings?

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·4 min read
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  • LNG
  • TRGP

Cheniere Energy, Inc. LNG is set to release third-quarter results on Nov 4. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.28 per share on revenues of $3.9 billion.

Let’s delve into the factors that might have influenced the liquefied natural gas exporter’s performance in the September quarter. But it’s worth taking a look at Cheniere Energy’s previous-quarter performance first.

Highlights of Q2 Earnings & Surprise History

In the last-reported quarter, the Houston, TX-based operator missed the consensus mark on escalating costs. Cheniere Energy had reported adjusted earnings per share of 54 cents that fell short of the Zacks Consensus Estimate of 92 cents. The company’s quarterly revenues of $3 billion also underperformed the Zacks Consensus Estimate by 10.3%.

Cheniere Energy beat the Zacks Consensus Estimate twice in the last four quarters and missed in the other two, ending up with an earnings surprise of 4.43%, on average. This is depicted in the graph below:

Cheniere Energy, Inc. Price and EPS Surprise

Cheniere Energy, Inc. Price and EPS Surprise
Cheniere Energy, Inc. Price and EPS Surprise

Cheniere Energy, Inc. price-eps-surprise | Cheniere Energy, Inc. Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for the third-quarter bottom line has been revised 2.4% upward in the last seven days. The estimated figure indicates a 247.1% surge year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 170.1% increase from the year-ago period.

Factors to Consider

LNG shipments for export from the United States have been robust for months on the back of environmental reasons and record higher prices of the super-chilled fuel elsewhere. Most analysts believe that deliveries appear poised for further gains this year on surging consumption in Europe and Asia, especially as we head into winter. The circumstances are particularly dire in Europe where gas supply is running low with the need for a steady refill from the United States ahead of the heating season. This augurs well for Cheniere Energy — the dominant U.S. LNG exporter — in the to-be-reported quarter. As proof of this bullish backdrop, the Zacks Consensus Estimate for the third-quarter LNG revenues is pegged at $3.8 billion, suggesting a improvement from the year-ago level of $1.4 billion.

On a somewhat bearish note though, Cheniere Energ’s total operating cost in the second quarter almost doubled year over year to $2.9 billion. The upward cost trajectory is likely to have continued in the third quarter since export of natural gas by setting up large liquefication plants is a very capital-intensive undertaking, with each unit running up multi-billion-dollar bills.

What Does Our Model Say?

The proven Zacks model does not conclusively show that Cheniere Energy is likely to beat estimates in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But 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.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -3.25%.

Zacks Rank: Cheniere Energy currently carries a Zacks Rank #1.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

While an earnings beat looks uncertain for Cheniere Energy, here are some firms from the oil and gas space that you may want to consider on the basis of our model:

Whiting Petroleum Corporation WLL has an Earnings ESP of +5.63% and a Zacks Rank #1. The firm is scheduled to release earnings on Nov 4.

EOG Resources EOG has an Earnings ESP of +2.16% and is Zacks #1 Ranked. The firm is scheduled to release earnings on Nov 4.

Targa Resources TRGP has an Earnings ESP of +4.00% and a Zacks Rank #1. The firm is scheduled to release earnings on Nov 4.


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EOG Resources, Inc. (EOG) : Free Stock Analysis Report

Cheniere Energy, Inc. (LNG) : Free Stock Analysis Report

Whiting Petroleum Corporation (WLL) : Free Stock Analysis Report

Targa Resources, Inc. (TRGP) : Free Stock Analysis Report

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