Cheniere Energy Jumps After EU Supply Deal Are Shares Still Attractively Priced for 2025?

If you have been watching Cheniere Energy (ticker: LNG), you are not alone. The stock’s story has been regularly turning heads, and recent moves on the chart have only made it more interesting for investors trying to decide whether to buy, sell, or hold. Over the past month, Cheniere Energy’s share price has climbed over 6%, with year-to-date gains at nearly 8%. Go back a year, and you are looking at about a 30% total return. In fact, looking further back, the five-year total return clocks in at a whopping 372%. Clearly, something is happening here, and it has a lot of investors wondering whether LNG’s run is just getting started.

Much of this momentum follows strong market demand for liquefied natural gas exports, but it also reflects shifting risk perceptions and valuation debates across the energy sector. Even after this run, Cheniere trades at a noticeable discount to analyst price targets, with the latest closing price at $237.56 versus a target of about $270. According to our composite valuation model, Cheniere earns a value score of 3 out of 6, meaning it is undervalued on half of the major checks we use to assess companies. This may be worth considering if you are looking for opportunities in U.S. energy stocks.

So, what exactly goes into that value score, and where does Cheniere stand on the different methods analysts use to assess valuation? Before we reveal an even smarter way to understand if LNG is undervalued, let’s dig into how Cheniere stacks up on the biggest valuation approaches investors rely on today.

Cheniere Energy delivered 30.3% returns over the last year. See how this stacks up to the rest of the Oil and Gas industry.

Approach 1: Cheniere Energy Cash Flows

A Discounted Cash Flow (DCF) model works by projecting a company’s future cash flows and then discounting them back to today’s value. This approach helps estimate what the business is really worth in the present. For Cheniere Energy, recent results show strong cash generation, with last year’s Free Cash Flow (FCF) amounting to $3.13 billion.

Looking ahead, analyst forecasts expect Cheniere’s annual FCF to steadily climb, reaching $7.33 billion by 2035. The projections over the next decade rely on a combination of actual results and consensus forecasts, with FCF expected to grow each year. Using a two-stage Free Cash Flow to Equity model, the intrinsic value of Cheniere’s stock is estimated at $540.53 per share based on these future cash flows and present discounting.

When compared to Cheniere’s current share price of $237.56, this DCF valuation suggests the stock is trading at a 56.1% discount. In other words, according to the cash flow projection, Cheniere appears significantly undervalued at today’s prices.

Result: UNDERVALUED

Our DCF analysis suggests Cheniere Energy is undervalued by 56.1%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: Cheniere Energy Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation metric, especially for profitable companies like Cheniere Energy. Since it measures how much investors are willing to pay for each dollar of the company's earnings, it can provide quick insight into whether the stock is attractively priced relative to its profitability.

When considering what constitutes a “normal” or “fair” PE ratio, analysts typically evaluate growth expectations and risk. Faster-growing, less risky companies often command a higher PE, while slower-growing or riskier companies tend to trade at lower multiples.

Cheniere currently trades at a PE of 13.58x. This is just above the Oil and Gas industry average of 13.16x and below the broader peer group average of 17.61x. For a more nuanced benchmark, the Fair Ratio—a proprietary Simply Wall St metric that factors in the company’s growth potential, margins, market cap, and sector risks—stands at 13.24x for Cheniere.

Comparing these numbers, Cheniere’s current PE is very close to its Fair Ratio. This suggests the stock is neither significantly overvalued nor undervalued based on this metric.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Cheniere Energy Narrative

Narratives are a simple yet powerful tool that help you link the story you see in a company, such as its future growth prospects or business risks, to numbers such as projected fair value, estimated revenue, earnings, and profit margins.

Rather than focusing solely on formulas or ratios, Narratives let you connect real-life events and your personal outlook to financial forecasts. This allows your investment decisions to reflect both the data and the story behind it.

On Simply Wall St, Narratives make this process easy and accessible, allowing millions of investors to share perspectives, test assumptions, and react to new information as it breaks. For example, when Cheniere Energy announces a new long-term supply deal or when market conditions change, your Narrative and its fair value update instantly.

This means you can compare your own fair value to the current price and decide whether it is time to buy, sell, or hold, based on your unique view and not just the average opinion.

For example, some Cheniere investors expect steady revenue growth and assign a high fair value, while others are more cautious and arrive at much lower estimates. Both perspectives are easily modeled and updated as new facts emerge.

Do you think there's more to the story for Cheniere Energy? Create your own Narrative to let the Community know!

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.

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