Cheniere Energy (LNG) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Cheniere Energy ( LNG) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Cheniere Energy as such a stock due to the following factors:

  • LNG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $159.2 million.
  • LNG has traded 1.7 million shares today.
  • LNG traded in a range 217.6% of the normal price range with a price range of $4.05.
  • LNG traded above its daily resistance level (quality: 20 days, meaning that the stock is crossing a resistance level set by the last 20 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on LNG:

Cheniere Energy, Inc., an energy company, engages in the liquefied natural gas (LNG) related business. It operates through two segments, LNG Terminal Business, and LNG and Natural Gas Marketing Business. Currently there are 4 analysts that rate Cheniere Energy a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Cheniere Energy has been 2.2 million shares per day over the past 30 days. Cheniere Energy has a market cap of $16.6 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.72 and a short float of 8.2% with 7.68 days to cover. Shares are up 0.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cheniere Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 173.7% when compared to the same quarter one year ago, falling from -$97.81 million to -$267.71 million.
  • CHENIERE ENERGY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CHENIERE ENERGY INC reported poor results of -$2.44 versus -$2.32 in the prior year. This year, the market expects an improvement in earnings (-$1.57 versus -$2.44).
  • In its most recent trading session, LNG has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • 45.17% is the gross profit margin for CHENIERE ENERGY INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, LNG's net profit margin of -391.56% significantly underperformed when compared to the industry average.
  • Net operating cash flow has increased to -$14.18 million or 22.16% when compared to the same quarter last year. In addition, CHENIERE ENERGY INC has also vastly surpassed the industry average cash flow growth rate of -53.29%.

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