Cheniere Energy has climbed back into a buy zone, sporting an improved profit outlook. The latest rally comes after the IBD 50 stock broke out of a new base, but then eased below the buy point for a spell.
The Houston-based producer and exporter of liquefied natural gas started its latest consolidation on May 4, when it topped off at 150. It roller coastered down to as low as 120.29 before starting an uptrend that would take it above the chart pattern's buy point of 150.10, according to MarketSmith pattern recognition. The buy zone goes up to 157.61.
Cheniere is also a member of IBD's Leaderboard.
Energy Stock's Bullish Technicals
With a 96 Relative Strength Rating (a stone's throw from the possible best of 99), Cheniere's relative strength line is in new high territory. That's a bullish sign.
The energy stock's oil and gas pipeline group also has a lot going for it. The industry group ranks No. 15 among Investor's Business Daily's 197 industry groups. Groups ranked 40 or higher tend to have stocks that have found favor in the stock market.
Cheniere's scores in other IBD Ratings are all over the ballpark, according to Stock Checkup. Its Composite Rating of 88 places it way down at No. 21 in its group. Normally you'd like to see a ranking in the top five of this all-encompassing rating, which combines fundamental, technical and profitability factors. But a Composite Rating of 88 is still in growth-stock territory, especially in this group.
The energy stock does rate No. 1 with its group for SMR Rating. This key rating melds sales growth, profit margins and return on equity. LNG stock's Earnings Per Share Rating is lowly No. 43 in this 55-stock group. This rating measures both recent quarterly and annual earnings. In Cheniere's case, four straight quarters of losses through this year's first quarter served to pull Cheniere's EPS Rating down below an optimal rating of 80 or higher.
Earnings Outlook Improves
But brighter days appear to be ahead for the LNG exporter. Though below expectations, Q2 earnings swung to $2.90 a share from a year-earlier loss of $1.30. Sales jumped 165% to $8 billion. In releasing Q2 results on Aug. 4, Cheniere lifted full-year guidance on consolidated adjusted EBITDA to $9.8 billion-$10.3 billion and distributable cash flow to $6.9 billion-$7.4 billion.
The energy company attributed those bump-ups mainly to expected proceeds from the anticipated termination of the LNG Terminal Use Agreement with a Chevron unit as well as sustained higher margins on LNG throughout 2022.
For the full year, the consensus EPS estimate from analysts tracked by FactSet is $8.57 vs. a loss of $9.25 a year earlier. Sales are seen jumping 79% to $28.465 billion. That's a growth stocklike percentage increase. And Wall Street sees EPS growth continuing next year with an 87% jump, though on an 18% decline in sales.
Cheniere owns and operates LNG terminals. It develops and builds and runs LNG facilities near Corpus Christi, Texas, and at the Sabine Pass LNG terminal, near Port Arthur, Texas.
