Cheniere Energy Q3 Earnings: Is AMEX:LNG Manipulating Earnings?

in EARNINGS/INVESTING IDEAS by

Cheniere Energy, Inc. (AMEX:LNG) is scheduled to report Q3 earnings results before markets open for trading on November 6, 2020.

The company is expected to report earnings of -$0.33/share on revenue of $1.853 billion. The consensus earnings per share (EPS) of -$0.33/share is based on a poll of 9 analysts and represents a growth in eps of 59.6% over the same quarter last year, when the company reported earnings of -$0.83/share.

The revenue forecast of $1.853 billion based on a poll of 11 analysts implies a year-over-year (YoY) decline in revenue of −14.6%. Last year the company reported $2.17 billion in revenue for the quarter.

Expected to report EPS of -$0.33/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,852.71 $2,170.00 −14.6%
EPS -$0.33 -$0.83 59.6%

Earnings Call Trends

Historically, management has exceeded analyst expectations 3 out of the last 8 tracked quarters, and missed expectations 5 quarters.

What are your expectations from Cheniere Energy, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.46 $1.45 214.1% Beat
Q1, 2020 $0.63 -$0.31 −149.1% Missed
Q4, 2019 $0.44 $0.33 −25.4% Missed
Q3, 2019 $0.32 -$0.83 −362.1% Missed
Q2, 2019 $0.37 -$0.14 −138.2% Missed
Q1, 2019 $0.62 $0.68 9.6% Beat
Q4, 2018 $0.40 $0.52 31.9% Beat
Q3, 2018 $0.34 $0.25 −28.1% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 2.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 6, 2020 $52.20 $53.34 2.2% Increase
April 30, 2020 $45.69 $43.25 −5.3% Decline
February 25, 2020 $51.91 $48.27 −7.0% Decline
November 1, 2019 $61.55 $62.41 1.4% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −1.90, the model suggests that the company is a possible earnings manipulator. A value of −1.90 implies a 2.8% chance of earnings manipulation.

Fundamentals And Technical Analysis

Cheniere Energy, Inc. is currently trading at $47.87/share, down −0.5% for the day. The company is trading at approximately 71.3% of its 52-week high of $67.11/share. The company’s stock price is down −10.3% since the last earnings report and down −1.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 42.61 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


AMEX:LNG Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 10.12 and a forward P/E multiple of 27.13.

Cheniere Energy, Inc.’s current share price also implies a price-to-book (P/B) multiple of 28.61. The following table summarizes some other key fundamental ratios:

Data as of November 1, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $47.87
P/E Ratio 10.1x
P/E Ratio (Fwd) 27.1x
PEG Ratio 0.0
Total Debt / Total Capital 68.5%
Levered Free Cash Flow -$430 million
EV / EBITDA 9.8x

Finbox

Cheniere Energy, Inc. is a large-cap stock with a market capitalization of $12.075 billion and a total enterprise value of $44.394 billion. The company operates in the Energy sector and the Oil, Gas & Consumable Fuels industry.

Cheniere Energy, Inc., an energy infrastructure company, engages in the liquefied natural gas (LNG) related businesses in the United States. It owns and operates Sabine Pass LNG terminal in Cameron Parish, Louisiana; and Corpus Christi LNG terminal near Corpus Christi, Texas. The company also owns Creole Trail pipeline, a 94-mile pipeline interconnecting the Sabine Pass LNG terminal with various interstate pipelines; and operates Corpus Christi pipeline, a 23-mile natural gas supply pipeline that interconnects the Corpus Christi LNG terminal with various interstate and intrastate natural gas pipelines. It is also involved in the LNG and natural gas marketing business. The company was founded in 1983 and is headquartered in Houston, Texas.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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