Cheniere Energy: A Bullish Setup for More Gains

Key Points

• Cheniere Energy is set up to gain another $75 in 2025.
• Improving demand will drive growth and distributable cash flow, which is critical for the capital return. 
• Investors can rely on the dividends and buybacks in 2025; the share count was reduced by more than 5.5% in 2024. 

Cheniere Energy’s NYSE: LNG stock price uptrend can continue in 2025, and new highs can be set because of improving cash flow and capital returns. The company’s business is supported by steadily rising natural gas demand globally and improving operational metrics that will be compounded by several new projects due to come online.

The takeaway is that top and distributable cash flow growth will be sustained into 2026 and longer, maintaining the robust dividend growth outlook and the long-term uptrend in the stock price. The stock is down 15% in mid-February but up 35% compared to last year and on track to gain another $75 in 2025. 

Cheniere Energy Guides for Double-Digit Profit Growth in 2025

Cheniere Energy’s Q4 2024 results were lackluster, but the 8% decline in revenue was expected due to softer pricing and volumes in 2024. However, strength was seen in the income and distributable cash flow, which held steady despite the top-line weakness and exceeded guidance significantly. The critical detail is that DCF was sufficient to pay down some long-term debt while paying dividends and buying back shares. Debt was reduced by $.350 million, improving the balance sheet and long-term capital return outlook. 

Cheniere’s capital return is robust, the distribution has grown in recent years, and the outlook for additional growth is positive. The dividend yield isn’t large at 0.9% in mid-February, but it is reliably safe at roughly 10% of the Q4 DCF and reported earnings. The repurchases are more robust, reducing the count by more than 5.5% on average for the quarter and fiscal year, and are also expected to continue in 2025. 

Cheniere’s guidance for 2025 is solid. The company refrained from issuing revenue targets but forecasts a significant increase in DCF. Distributable cash flow is expected to grow more than 17% in 2025 as its projects come online, revenue leverage is improved, and capital spending needs diminish. One project, the Corpus Christi Phase III, has begun to liquify gas and is expected to reach full capacity soon. The balance sheet reflects the impact of spending projects, including reduced cash, but also a 12% increase in shareholder equity tied to capital improvements and debt reduction. 

The long-term outlook is also solid. Growth prospects aside, more than 90% of Cheniere’s business is linked to long-term contracts that guarantee its business. Catalysts in 2025 include a new deal with India’s Indian Oil to provide up to 2 million metric tons annually for 15 years, worth about 1% of the 2024 exports. 

Sell-Side Interest Is a Tailwind for Cheniere Energy Stock

The analysts and institutional trends provide a tailwind for the stock, including increased coverage, a rising consensus estimate, and institutions buying on balance. The 13 analyst reports tracked by MarketBeat are four more than in mid-2024 and show a high conviction in the Moderate Buy rating. Twelve ratings, or about 92%, are Buy or better. They see the stock retesting its all-time high at the consensus, and the revisions lead to the high-end range, suggesting a new high is possible. Institutional activity, which has been bullish for three consecutive quarters, is ramping higher in Q1 2025 and has total ownership above 87%. That trend and the analyst's trends are unlikely to cease, given the outlook for 2025. 

Cheniere Energy’s stock price struggled with traction following the release, but the uptrend is intact. Support is present at a critical moving average that is likely to usher the price action higher as the year progresses. The crucial resistance point is near the all-time high and may be reached before mid-year. The risk is that support for this stock will falter, allowing its price to fall below the long-term 150-day EMA. The stock price could drop to $200 or lower in that scenario, but that is unexpected due to the institutional activity and analysts' support.