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Why Is Cheniere Energy (LNG) Down 2.6% Since Last Earnings Report?

A month has gone by since the last earnings report for Cheniere Energy (LNG). Shares have lost about 2.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cheniere Energy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Cheniere Q1 Earnings & Sales Above Estimates

Cheniere Energy reported a first-quarter 2023 adjusted profit of $6.89 per share, which outpaced the Zacks Consensus Estimate of $5.96. This could be attributed to higher contributions from certain portfolio optimization activities and increasing total margins per metric million British thermal units of liquefied natural gas (“LNG”) delivered.

The bottom line, however, deteriorated from the year-ago quarter’s level of $7.35. This was due to a higher provision for income tax as well as a higher contribution to noncontrolling interests in the reported quarter.

Revenues came in at $7,310 million, which beat the Zacks Consensus Estimate of $6,576 million. This can be attributed to the year-over-year increase in cargoes shipped and a surge in volumes and prices. The top line, however, decreased 2.3%from the year-ago figure of $7,484 million due to lower LNG revenues.

Cheniere Energy reported an adjusted EBITDA of $3.6 billion, with distributable cash flow (DCF) of around $2.9 billion. In the reported quarter, the company shipped 167 cargoes compared with 160 in the year-ago period. Total volumes of LNG exported were 602 trillion British thermal units (TBtu) compared with 585 TBtu in the comparable period of 2022.

Costs & Balance Sheet

As of Mar 31, 2023, Cheniere Energy had approximately $3.4 billion of cash and cash equivalents. Its net long-term debt amounted to $23.9 billion.

As of the same date, the company reported a cost (recovery) of sales of $1,539 million.

Shareholders Capital-Return Initiative

Cheniere Energy repurchased approximately 3.1 million shares of common stock for around $450 million. It also declared a quarterly cash dividend of 395 cents per common share payable on May 17, 2023, to shareholders of record as of the close of business on May 10, 2023.

Guidance

The company expects adjusted EBITDA in the $8.2-$8.7 billion range for 2023.

It revised its DCF to the band of $5.7-$6.2 billion from the previously guided range of $5.5-$6 billion.

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How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -26.42% due to these changes.

VGM Scores

Currently, Cheniere Energy has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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.

Performance of an Industry Player

Cheniere Energy is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, Southwestern Energy (SWN), a stock from the same industry, has gained 2.1%. The company reported its results for the quarter ended March 2023 more than a month ago.

Southwestern Energy reported revenues of $2.12 billion in the last reported quarter, representing a year-over-year change of -28%. EPS of $0.31 for the same period compares with $0.40 a year ago.

Southwestern Energy is expected to post earnings of $0.10 per share for the current quarter, representing a year-over-year change of -69.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -16.2%.

Southwestern Energy has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.

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