Why Is Cheniere Energy (LNG) Up 7.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Cheniere Energy (LNG). Shares have added about 7.2% 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 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 drivers.
Cheniere’s Q1 Earnings Top Estimates, Revenues Miss
Cheniere Energy reported adjusted earnings per share of $1.54 in the first quarter, beating the Zacks Consensus Estimate of 75 cents as well as the year-ago quarter’s earnings of $1.43, attributable to year-over-year rise in LNG revenues.
Moreover, revenues from LNG came in at $2,999 million, increasing 16.8% from the year-ago number of $2,568 million. However, the same missed the Zacks Consensus Estimate of $3,046 million.
Meanwhile, quarterly revenues rose 14% to $3.09 billion from $2.71 billion a year ago. Nonetheless, the top line fell short of the Zacks Consensus Estimate of $3.13 billion in the quarter under review due to lower-than-expected LNG revenues.
The company posted adjusted EBITDA of $1.45 billion with DCF of around $750 million. During the quarter, Cheniere Energy shipped 133 cargoes, compared with 128 in the year-earlier figure. Total volumes of LNG exported were 476 trillion British thermal units (TBtu) compared with 455 TBtu in the prior year.
Costs & Balance Sheet
Overall costs and expenses rose 48.7% from the corresponding quarter of last year to $2,026 million. This rise is mainly attributed to higher cost of sales expenses that climbed 91.4% from the year-ago quarter to $1,386 million.
As of Mar 31, 2021, Cheniere Energy had approximately $1,667 million in cash and cash equivalents. Its net long-term debt was $29,465 million.
Guidance
Per Jack Fusco, Cheniere Energy’s president and CEO, “We placed Corpus Christi Train 3 into service ahead of schedule and within budget and commenced our 25-year SPA with CPC Corporation, further reinforcing our reputation for delivering on our promises to our customers.”
He further added that Cheniere's outlook for the rest of the year improved as a result of continued betterment in its global LNG business dynamics as well as a solid first-quarter performance, which allowed it to raise its 2021 financial guidance for the second quarter in a row.
Cheniere Energy revised and raised its outlook for the current year. It anticipates adjusted EBITDA within $4.3-$4.6 billion with distributable cash flow between $1.6 billion and $1.9 billion.
Project Updates
Sabine Pass Liquefaction Project (SPL): Sabine Pass is North America’s first large-scale liquefied gas export facility. Cheniere Energy intends to construct up to six trains at the Sabine Pass with each train’s expected capacity to be 4.5 million tons per annum (Mtpa). Notably, the run-rate of LNG production is projected within 4.7-5 Mtpa. While Trains 1 to 5 are functional, Train 6 is currently under construction with completion estimated within the second half of 2022.
Corpus Christi Liquefaction Project (CCL): Under this project, the company built three trains, each with a nominal production capacity predicted to be 4.5 Mtpa of LNG. Notably, Train 1, 2 and 3 are functional. In June 2019, the first commissioned cargo from Train 2 was dispatched. Train 3 came online in March this year, ahead of schedule.
Corpus Christi Expansion Project: Cheniere Energy looks to develop seven midscale liquefaction trains adjacent to the CCL Project. Total production capacity of these trains is assumed to be 10 Mtpa.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -16.38% due to these changes.
VGM Scores
Currently, Cheniere Energy has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cheniere Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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