A Look At The Fair Value Of Cheniere Energy, Inc. (NYSE:LNG)

Simply Wall St.12-21 19:00

Key Insights Using the 2 Stage Free Cash Flow to Equity, Cheniere Energy fair value estimate is US$225 Current share price of US$209 suggests Cheniere Energy is potentially trading close to its ...

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(NYSE:LNG)","media":"Simply Wall St.","content":"<div>\n<p>Key Insights\n\n Using the 2 Stage Free Cash Flow to Equity, Cheniere Energy fair value estimate is US$225 \n Current share price of US$209 suggests Cheniere Energy is potentially trading close to its ...</p>\n\n<a href=\"https://finance.yahoo.com/news/look-fair-value-cheniere-energy-110022784.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>A Look At The Fair Value Of Cheniere Energy, Inc. (NYSE:LNG)</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nA Look At The Fair Value Of Cheniere Energy, Inc. (NYSE:LNG)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-21 19:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/look-fair-value-cheniere-energy-110022784.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights\n\n Using the 2 Stage Free Cash Flow to Equity, Cheniere Energy fair value estimate is US$225 \n Current share price of US$209 suggests Cheniere Energy is potentially trading close to its ...</p>\n\n<a href=\"https://finance.yahoo.com/news/look-fair-value-cheniere-energy-110022784.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"NYSE","symbol_name":"纽交所","start_time":0,"source_url":"https://finance.yahoo.com/news/look-fair-value-cheniere-energy-110022784.html","article_id":"2493231709","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/.ffpYNd652y_RFBEdkStxQ--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/22763255fd07b4ca1afee2bfc46e643f"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2493231709","pubTimestamp":1734778822,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Using the 2 Stage Free Cash Flow to Equity, Cheniere Energy fair value estimate is US$225. Current share price of US$209 suggests Cheniere Energy is potentially trading close to its fair value. Analyst price target for LNG is US$229, which is 1.6% above our fair value estimate. In this article we are going to estimate the intrinsic value of Cheniere Energy, Inc.  by projecting its future cash flows and then discounting them to today's value. We will use the Discounted Cash Flow  model on this occasion. It may sound complicated, but actually it is quite simple!Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you.","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"NYSE":"纽交所","TV":"墨西哥电视","LU2449327464.USD":"HSBC GIF GLOBAL INFRASTRUCTURE EQUITY \"AC\" (USD) ACC","LU0742534661.SGD":"Fidelity America A-SGD (hedged)","FCF":"第一联邦金融","BK4144":"石油与天然气的储存和运输","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","LU0048573561.USD":"FIDELITY AMERICA \"A\" (USD) INC","BK4100":"有线和卫星","BK4211":"区域性银行","LNG":"Cheniere Energy Inc","LU0788109394.HKD":"BGF WORLD ENERGY \"A2\" (HKDHGD) ACC","LU0122376428.USD":"贝莱德世界能源基金A2","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","LU0251142724.SGD":"Fidelity America A-SGD","IE00B29SXK94.USD":"FIRST SENTIER GLOBAL LISTED INFRASTRUCTURE \"I\" (USD) ACC","LU0251131958.USD":"FIDELITY AMERICA \"A\" (USD) ACC","IE00B29SXL02.USD":"FIRST SENTIER GLOBAL LISTED INFRASTRUCTURE \"I\" (USD) INC","LU0314104364.USD":"MANULIFE GF AMERICAN GROWTH \"AA\" (USD) INC","LU0368265418.SGD":"Blackrock World Energy Fund A2 SGD-H"},"translate_title":"切尼尔能源公司（纽约证券交易所股票代码：LNG）的公允价值一览","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"TV":1,"NYSE":1,"DCF":1,"FCF":1,"LNG":1},"content_text":"Key Insights\n\n Using the 2 Stage Free Cash Flow to Equity, Cheniere Energy fair value estimate is US$225 \n Current share price of US$209 suggests Cheniere Energy is potentially trading close to its fair value \n  Analyst price target for LNG is US$229, which is 1.6% above our fair value estimate \n\n In this article we are going to estimate the intrinsic value of Cheniere Energy, Inc. (NYSE:LNG) by projecting its future cash flows and then discounting them to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. It may sound complicated, but actually it is quite simple! \n Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. \n See our latest analysis for Cheniere Energy \n The Model \n We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. \n A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we discount the value of these future cash flows to their estimated value in today's dollars: \n 10-year free cash flow (FCF) forecast \n\n\n\n\n2025\n2026\n2027\n2028\n2029\n2030\n2031\n2032\n2033\n2034\n\n\n Levered FCF ($, Millions) \nUS$2.19b\nUS$3.33b\nUS$3.24b\nUS$3.21b\nUS$3.22b\nUS$3.25b\nUS$3.30b\nUS$3.35b\nUS$3.42b\nUS$3.50b\n\n\nGrowth Rate Estimate Source\nAnalyst x5\nAnalyst x4\nAnalyst x1\nEst @ -0.86%\nEst @ 0.18%\nEst @ 0.91%\nEst @ 1.43%\nEst @ 1.78%\nEst @ 2.03%\nEst @ 2.21%\n\n\n Present Value ($, Millions) Discounted @ 8.2% \nUS$2.0k\nUS$2.8k\nUS$2.6k\nUS$2.3k\nUS$2.2k\nUS$2.0k\nUS$1.9k\nUS$1.8k\nUS$1.7k\nUS$1.6k\n\n\n\n(\"Est\" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$21b\n We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.6%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.2%. \nTerminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$3.5b× (1 + 2.6%) ÷ (8.2%– 2.6%) = US$65b\nPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= US$65b÷ ( 1 + 8.2%)10= US$30b\n The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$51b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of US$209, the company appears about fair value at a 7.3% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. \n\n\n\n  NYSE:LNG Discounted Cash Flow December 21st 2024\n \n\n The Assumptions \n Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Cheniere Energy as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.2%, which is based on a levered beta of 1.344. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. \nSWOT Analysis for Cheniere Energy\n\n\nStrength\n\nDebt is well covered by earnings and cashflows.\n\n\nDividends are covered by earnings and cash flows.\n\n\nDividend information for LNG.\n\n\n\nWeakness\n\nEarnings declined over the past year.\n\n\nDividend is low compared to the top 25% of dividend payers in the Oil and Gas market.\n\n\n\nOpportunity\n\nAnnual revenue is forecast to grow faster than the American market.\n\n\n Current share price is below our estimate of fair value.\n\n\n\nThreat\n\nAnnual earnings are forecast to decline for the next 3 years.\n\n\nWhat else are analysts forecasting for LNG?\n\n\n\n Looking Ahead: \n Valuation is only one side of the coin in terms of building your investment thesis, and it is only one of many factors that you need to assess for a company. It's not possible to obtain a foolproof valuation with a DCF model. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For Cheniere Energy, there are three important aspects you should further research: \n\n Risks: As an example, we've found 3 warning signs for Cheniere Energy (1 is a bit concerning!) that you need to consider before investing here. \nFuture Earnings: How does LNG's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.\n Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! \n\n PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.\nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2493231709"}