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Cheniere (LNG) Stock Hardly Moves Since Q3 Earnings Miss

Zacks Equity Research
·6-min read

Cheniere Energy Inc.’s LNG stock has shown an insignificant performance since LNG’s third-quarter 2021 earnings announcement on Nov 4.

Despite an increased adjusted EBITDA and a well-retained Distributable Cash Flow (DCF) guidance for 2021, and the initiation of its quarterly dividend, Cheniere Energy's shares failed to show an uptrend. This downside was possibly due to lower-than-anticipated third-quarter earnings and sales performance, and significantly higher operating expenses.

Behind the Earnings Headlines

This largest U.S. liquefied natural gas (LNG) exporter reported adjusted earnings per share of 94 cents for the third quarter, missing the Zacks Consensus Estimate of $1.28 due to lower-than-expected LNG revenues. However, the bottom line reversed the year-ago quarter’s loss of 87 cents, attributable to a year-over-year rise in LNG revenues.

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Revenues from LNG came in at $3,078 million, missing the Zacks Consensus Estimate of $3,829 million. However, the same increased 124.2% from the year-ago number of $1,373 million.

Quarterly revenues rose 119.2% to $3.2 billion from $1.46 billion a year ago. However, the top line fell short of the Zacks Consensus Estimate of $3.94 billion in the quarter under review.

Cheniere Energyposted an adjusted EBITDA of $1.05 billion with a DCF of around $390 million. During the quarter, LNG shipped 141 cargoes compared with 55 in the year-earlier period. Total volumes of LNG exported were 500 trillion British thermal units (TBtu) compared with 187 TBtu in the prior year.

Costs & Balance Sheet

Overall costs and expenses rose 300% from the level recorded in the corresponding quarter of last year to $5,550 million. This rise is mainly attributed to higher cost of sales expenses that climbed 533.9% from the year-ago quarter’s number to $4.9 billion.

As of Sep 30, 2021, Cheniere Energy had approximately $2,203 million of cash and cash equivalents. Its net long-term debt was $29,481 million.

Shareholders' Capital-Return Initiative

Cheniere Energyrewarded its shareholders through stock dividends and an extended share repurchase authorization. This Houston, TX-based LNG paid out its inaugural quarterly dividend of 33 cents per share on Nov 17, 2021, to its shareholders of record as of Nov 3.

Moreover, LNG expanded its $1-billion share buyback program by three years, beginning the fourth quarter of 2021. In the third quarter, share repurchases under the prior $1-billion authorization resumed.

Cheniere Energy, Inc. Price, Consensus and EPS Surprise

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

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

Guidance

Cheniere Energy's exceptional third-quarter results are a result of its operational efficiency and the global LNG market's ongoing growth. Looking ahead to 2022, Cheniere Energyanticipates major completion on Train 6 at the Sabine Pass in the first quarter, almost a year ahead of schedule.

Cheniere Energy updated its outlook for the current year. It raised adjusted EBITDA guidance to $4.6-$4.9 billion. LNG reiterated its distributable cash flow between $1.8 billion and $2.1 billion.

For 2022, Cheniere Energy anticipates adjusted EBITDA within $5.8-$6.3 billion and distributable cash flow between $3.1 billion and $3.6 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). 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 the completion estimated in the first quarter of 2022.

Corpus Christi Liquefaction Project (CCL): Under this project, LNGbuilt three trains with a total production capacity of 15 Mtpa of LNG. 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 before time.

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.

Zacks Rank & Key Picks

Cheniere Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are EOG Resources EOG, Diamondback Energy FANG and ConocoPhillips COP, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources reported third-quarter 2021 adjusted earnings per share of $2.16, beating the Zacks Consensus Estimate of $2.01. Solid earnings were driven by increased production volumes and a higher realization of commodity prices.

EOG announced a quarterly dividend of 75 cents per share, indicating an 82% increase from the previous level. The dividend will be paid out on Jan 28, 2022, to its shareholders of record as of Jan 14, 2022. EOG Resources also declared a special dividend of $2 per share. Moreover, the board of directors updated its share repurchase authorization to $5 billion.

Diamondback Energy reported third-quarter 2021 adjusted earnings of $2.94 per share, which surpassed the Zacks Consensus Estimate of $2.81 and the year-ago quarter’s earnings of 62 cents. FANG’s bottom line was aided by better-than-expected production.

The board of directors declared a dividend of 50 cents per share for the third quarter, reflecting an 11.1% hike in its quarterly payout from the previous level of 45 cents. The amount will be paid out on Nov 18, 2021, to its shareholders of record as of Nov 11. FANG also generated a free cash flow of $740 million in the third quarter.

ConocoPhillips reported third-quarter 2021 adjusted earnings per share of $1.77, comfortably beating the Zacks Consensus Estimate of $1.53. This outperformance is led by increased production volumes owing to the Concho acquisition and the rising realized commodity prices.

Based in Houston, TX, this one of the world’s largest independent oil and gas producers’ capital expenditures and investments totaled $1.3 billion, and dividend payments grossed $579 million. ConocoPhillips’ net cash provided by operating activities was recorded at $4.8 billion, up from the year-ago figure of $868 million. COP generated a free cash flow of $2.8 billion in the third quarter.


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