Assessing Cheniere Energy Partners (CQP) Valuation After Recent Share Price Strength

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Why Cheniere Energy Partners (CQP) is on investors’ radar today

Cheniere Energy Partners (CQP) has drawn attention after recent trading left the units at a last close of $67.02, with returns over the month, past 3 months and year all in positive territory.

See our latest analysis for Cheniere Energy Partners.

The 1-day share price return of 1.96% and 7-day share price return of 6.60% build on a 90-day share price return of 18.85%, while the 5-year total shareholder return of 123.84% reflects a longer track record and suggests that momentum has been building rather than fading recently.

If this kind of energy infrastructure story has your attention, it can be useful to broaden your watchlist and check out 91 nuclear energy infrastructure stocks

So, with CQP trading above the average analyst target and an intrinsic value estimate that sits well below the current unit price, you have to ask whether there is still a buying opportunity or whether markets are already pricing in future growth.

Price-to-Earnings of 13x: Is it justified?

On a simple P/E view, Cheniere Energy Partners trades at 13x earnings, which sits below peers and the wider US market even after the recent unit price strength.

The P/E multiple compares the current unit price to earnings per unit, so it gives you a quick sense of how much investors are paying for each dollar of current profit. For a mature, earnings generating energy infrastructure business, this is often one of the cleaner yardsticks to compare against similar names.

Here, CQP screens as “good value” relative to both close peers, where the average P/E sits at 18.4x, and the broader US Oil and Gas industry on 15x. Against an estimated fair P/E of 21.1x, the current 13x multiple is also well below the level that regression based analysis suggests the market could move toward if sentiment or expectations were to adjust.

Explore the SWS fair ratio for Cheniere Energy Partners

Result: Price-to-Earnings of 13x (UNDERVALUED)

However, you still need to weigh risks such as flat or falling earnings, given an annual net income decline of 2.23%, and sensitivity to global LNG demand.

Find out about the key risks to this Cheniere Energy Partners narrative.

Another angle from our DCF model

While the 13x P/E makes CQP look inexpensive, the SWS DCF model paints a very different picture, with an estimated future cash flow value of $2.45 per unit versus the current $67.02. That flags CQP as overvalued on this lens. Which signal do you give more weight to?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Cheniere Energy Partners for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Next Steps

With mixed signals across valuation tools, it makes sense to check the underlying data yourself and not wait to form an opinion. To weigh both the risks investors are worried about and the rewards they are optimistic about, start with 3 key rewards and 3 important warning signs

Ready to find more ideas worth your time?

Once you have formed a view on CQP, it can be smart to widen the net and see what other stocks look interesting on the numbers.

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.

Companies discussed in this article include CQP.

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