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What to Look for in Cheniere Energy's (LNG) Q2 Earnings?

Zacks Equity Research
·4-min read

Cheniere Energy, Inc. LNG is set to release second-quarter results on Aug 4. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $2.83 per share on revenues of $6.9 billion.

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

Highlights of Q1 Earnings & Surprise History

In the last-reported quarter, the Houston, TX-based transporter of the super-chilled fuel crushed the consensus mark on higher-than-expected shipments. Cheniere Energy had reported adjusted earnings per share of $7.35 that comprehensively beat the Zacks Consensus Estimate of $3.34. The company’s quarterly revenues of $7.5 billion also outperformed the Zacks Consensus Estimate by 18.3%.

Cheniere Energy beat the Zacks Consensus Estimate just once in the last four quarters and missed in the other three, ending up with a negative earnings surprise of 28.1%, 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

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Trend in Estimate Revision

The Zacks Consensus Estimate for the third-quarter bottom line has been revised 2.2% upward in the last seven days. The estimated figure indicates a 424.1% surge year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 128.7% 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-high prices of the super-chilled fuel elsewhere. Now, with the Russia-Ukraine conflict, LNG has become even more coveted, with an increasing number of countries vying for the American-made fuel to replace supplies from Moscow. This means that LNG deliveries are poised to rise further. 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 second-quarter LNG revenues is pegged at $6.7 billion, suggesting a whopping increase from the year-ago level of $2.9 billion.

On a somewhat bearish note, though, Cheniere Energy’s operating costs and expenses in the first quarter almost quadrupled year over year to $8.1 billion. The upward cost trajectory is likely to have continued in the to-be-reported period since the export of natural gas by setting up large liquefication plants is an extremely 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 second 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 -4.91%.

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 energy space that you may want to consider on the basis of our model:

Delek US Holdings, Inc. DK has an Earnings ESP of +4.07% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 4.

For 2022, Delek US Holdings has a projected earnings growth rate of 353.5%. Valued at around $2.3 billion, DK has gained around 55.2% in a year.

Calumet Specialty Products Partners, L.P. CLMT has an Earnings ESP of +30.00% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 5.

Calumet topped the Zacks Consensus Estimate by an average of 22.2% in the trailing four quarters. CLMT has gained some 100.4% in a year.

ConocoPhillips COP has an Earnings ESP of +1.21% and a Zacks Rank #3. The firm is scheduled to release earnings on Aug 4.

For 2022, ConocoPhillips has a projected earnings growth rate of 143.6%. Valued at around $123 billion, COP has gained around 75.9% in a year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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ConocoPhillips (COP) : Free Stock Analysis Report
 
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