LNG: Bearish Signals Triggering Put Option Consideration

Cheniere is an energy infrastructure company focused on LNG-related businesses, providing 'clean, secure, and affordable' LNG to integrated energy companies, utilities, and energy trading companies globally. They operate natural gas liquefaction and export facilities, including the 'Sabine Pass LNG Terminal' and the 'Corpus Christi LNG Terminal', with a total production capacity of approximately 45 mtpa as of December 31, 2024. Cheniere differentiates itself as a full-service LNG provider, owning and operating LNG and natural gas infrastructure to meet long-term customer energy demands. Their business strategy involves securing long-term customer contracts, safely operating assets, and providing destination flexibility and price diversity. They utilize Sales and Purchase Agreements ('SPAs') and Integrated Production Marketing ('IPM') agreements.

LNG's technical outlook is decidedly bearish. The stock price has experienced a significant downtrend over the past 90 days, closing recently at $206.645. This is considerably below the 50-day SMA of $230.37 and the 200-day SMA, which is starting to register at $229.66, confirming the sustained downtrend. Momentum indicators reinforce this bearish view. The RSI_14 is at 24.59, indicating oversold conditions, but in a strong downtrend, this can persist. The MACD_12_26_9 is deeply negative at -5.509, with the MACDh histogram also negative, showing accelerating downward momentum. The STOCHk is at 13.87, also suggesting oversold conditions, but with no immediate sign of reversal. The price is also below the lower Bollinger Band (BBL_20_2.0_2.0) at 206.72, further confirming the strong downward pressure. The ADX is elevated at 24.80 indicating a strong trend, which in this case is bearish. Given these signals, a continued downtrend is likely in the short to medium term.

Cheniere's MD&A presents a generally positive but complex financial picture. For the three months ended September 30, 2025, total `LNG revenues` increased by $748 million year-over-year to $4,302 million, and for the nine-month period, `LNG revenues` increased by $3,489 million to $14,122 million. This revenue growth was attributed to higher pricing per MMBtu and increased LNG volumes delivered due to the completion of Corpus Christi Stage 3 Project Trains 1 and 2. The company does not explicitly state Gross Profit margin, but it does state that the increases in `LNG revenues` were 'partially offset' by increases in 'cost of sales'. `Net cash provided by operating activities` decreased by $269 million to $3,484 million for the nine months ended September 30, 2025, due to working capital changes, though this was partially offset by higher net cash inflows from LNG sales and derivative settlements. Cheniere is pursuing disciplined accretive growth, including the SPL Expansion Project with an expected total peak production capacity of up to ~20 mtpa of LNG and the CCL Stage 4 Expansion Project with an expected total peak production capacity of up to 24 mtpa of LNG. The company expects the FDDEI regime commencing in 2026 to favorably impact its effective tax rate. Overall, Cheniere is expanding and increasing its LNG production and sales, but working capital fluctuations and project costs require careful monitoring.

Cheniere Energy's Q2 2025 earnings call conveys a moderately bullish sentiment, underscored by strong performance and revised guidance. CEO Jack Fusco highlighted the 'upwardly revised run rate production and financial forecast' driven by debottlenecking efforts and the FID on Corpus Christi Midscale Trains 8 & 9. The company is tightening its full year 2025 guidance range to $6.6 billion to $7 billion in consolidated adjusted EBITDA and raising its guidance range to $4.4 billion to $4.8 billion in distributable cash flow. CFO Zach Davis emphasized that the successful maintenance programs, including the large-scale turnaround at Sabine Pass, were completed 'safely and on budget,' further solidifying confidence in achieving the updated forecast. Commercially, a new 1 million tonne per annum SPA with JERA, extending through 2050, signifies continued market confidence. Anatol Feygin noted that the LNG market continues to navigate global uncertainty, but expects Asia to underpin long-term LNG market growth. Overall, the company's focus on brownfield expansion and disciplined capital allocation, including share repurchases and dividend growth, supports a positive outlook.

LNG's financial performance over the past several quarters reveals a generally positive trajectory. Revenue has increased from $3.246B in Q2 2024 to $4.441B in Q3 2025, indicating growth in the company's top line. While the gross profit ratio has fluctuated, it settled at a healthy 0.606 in the most recent quarter. Operating cash flow has remained consistently positive, with the latest quarter reporting $1.425B, demonstrating the company's ability to generate cash from its operations. Total debt, however, has decreased from $26.731B in Q2 2024 to $3.235B in Q3 2025, indicating a significant deleveraging of the balance sheet. The company's net income has also been consistently positive, with the latest quarter reporting $1.049B. Overall, LNG's financials suggest a strong and improving financial position.

The company presents a moderately bullish investment profile based on its financial data. Revenue has shown positive growth, indicating increasing market demand or successful market penetration. The gross margin is healthy, suggesting efficient cost management in production or service delivery. A strong return on equity (ROE) signals effective utilization of shareholder investments to generate profit. The price-to-earnings (P/E) ratio suggests the stock is trading at a premium, but this could be justified by the company's growth prospects and profitability. A manageable debt-to-equity ratio indicates a reasonable level of financial leverage. The current ratio, being greater than 1, demonstrates the company's ability to cover short-term liabilities with its current assets, further solidifying its financial health. Overall, the combination of revenue growth, healthy profitability metrics, and a solid balance sheet makes the company an attractive investment for the next 12 months, although the elevated P/E ratio warrants careful monitoring.