Expanding LNG Capacity Will Offer Opportunities Despite Market Risks

Key Takeaways

• Expansion of LNG production capacity and strong long-term supply agreements position the company for stable cash flows and resilience amid global demand growth.
  
• Efficiency improvements and ESG initiatives enhance competitiveness, while flexible contracts support opportunistic gains and sustained top-line growth in evolving energy markets.
  
• Rising global LNG supply, demand uncertainty, and decarbonization policies create major risks for Cheniere's revenue growth, project returns, and long-term market stability.

Catalysts

An energy infrastructure company, primarily engages in the liquefied natural gas (LNG) related businesses in the United States.

• Cheniere's ongoing expansion of LNG production capacity-including the final investment decision and construction of Corpus Christi Midscale Trains 8 & 9 and advancing permitting for future trains-positions the company to capture increasing global demand for LNG, directly supporting upward revisions in long-term revenue and EBITDA as these projects come online.
  
• New long-term supply agreements, such as the recently announced 1 mtpa SPA with JERA (the first with a Japanese counterparty), reflect the growing appeal of U.S. LNG for energy security and diversification, particularly in Europe and Asia, and underpin highly visible, stable future cash flows and margin stability.
  
• Investments in debottlenecking and supply chain optimization are boosting facility efficiency and capacity (adding about 1 mtpa without new major builds), while ongoing efforts to reduce carbon intensity improve Cheniere's competitiveness in securing contracts with ESG-conscious buyers, which is likely to enhance net margins over the long term.
  
• The accelerated buildout of LNG import and regasification infrastructure in Asian markets-driven by population growth, rising living standards, and policy-driven transitions from coal and nuclear-provides a durable tailwind for Cheniere's export volumes, supporting sustained top-line and volume growth into the 2030s.
  
• Cheniere's robust, long-term contracted portfolio with high-quality counterparties and flexible, destination-free LNG supply enables opportunistic optimization in volatile energy markets (as seen by spot sales and downstream margin capture), bolstering near-term and long-term earnings resilience despite global market fluctuations.

Cheniere Energy Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Cheniere Energy's revenue will grow by 9.6% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 21.1% today to 12.3% in 3 years time.
• Analysts expect earnings to reach $3.0 billion (and earnings per share of $13.99) by about August 2028, down from $3.8 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $4.1 billion in earnings, and the most bearish expecting $2.2 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.8x on those 2028 earnings, up from 13.2x today. This future PE is greater than the current PE for the US Oil and Gas industry at 13.0x.
• Analysts expect the number of shares outstanding to decline by 2.87% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.56%, as per the Simply Wall St company report.

Cheniere Energy Future Earnings Per Share Growth

Risks

• The coming surge in global LNG liquefaction capacity-particularly from the U.S., Qatar, and Africa, with 88 million tonnes due online in 2025–26-risks tipping the market into structural oversupply, which could lead to prolonged pressure on spot and contract pricing and directly impact Cheniere's long-term revenue and EBITDA growth.
  
• Cheniere's long-term growth strategy and large brownfield expansions are heavily reliant on continued robust global LNG demand, especially from Asia; however, China's recent decline in LNG imports due to macroeconomic headwinds, increased domestic production, pipeline imports, and strong renewables growth raises uncertainty about the durability of demand and creates risk of overbuilding, thereby threatening future capacity utilization and earnings power.
  
• The global policy landscape is increasingly emphasizing decarbonization and renewables adoption; ongoing EU legislation to ban Russian gas by 2026, as well as accelerated renewables buildout and energy storage advancements in Asia and Europe, could structurally reduce LNG's role in the long-term energy mix and eventually shrink Cheniere's addressable market, impacting utilization rates, revenue, and margin outlook by the mid-2030s.
  
• Significant capital expenditure needs for expansion projects (midscale trains, debottlenecking, potential growth to 100 million tonnes) could place pressure on Cheniere's earnings and free cash flow should LNG margin projections fall short, especially if SPA prices or offtake demand weaken; this risk is compounded by execution/permits uncertainty and potential for rising EPC costs, which could delay or lower returns to shareholders.
  
• Cheniere's returns and margin profile benefit heavily from long-term fixed-fee contracts with creditworthy counterparties; any material oversupply in LNG markets, renegotiation or default on these contracts, or policy-driven restrictions in key import regions (such as tariffs, trade tensions, or domestic LNG build-out in China/Russia) would introduce revenue instability and could trigger sustained declines in earnings and distributable cash flow.

Valuation

• The analysts have a consensus price target of $269.429 for Cheniere Energy based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $290.0, and the most bearish reporting a price target of just $227.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $24.0 billion, earnings will come to $3.0 billion, and it would be trading on a PE ratio of 22.8x, assuming you use a discount rate of 7.6%.
  
• Given the current share price of $231.29, the analyst price target of $269.43 is 14.2% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.