Intrinsic value of Cheniere Energy - LNG

Previous Close

$58.18

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$58.18

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of LNG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  373.43
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  1,283
  2,053
  3,172
  4,743
  6,882
  9,709
  13,348
  17,917
  23,527
  30,273
  38,237
  47,482
  58,051
  69,971
  83,252
  97,890
  113,869
  131,168
  149,757
  169,608
  190,690
  212,975
  236,441
  261,069
  286,849
  313,776
  341,854
  371,095
  401,518
  433,151
  466,030
Variable operating expenses, $m
 
  1,274
  1,965
  2,934
  4,254
  5,998
  8,244
  11,063
  14,524
  18,686
  23,600
  29,296
  35,818
  43,172
  51,366
  60,398
  70,257
  80,930
  92,400
  104,648
  117,655
  131,405
  145,884
  161,079
  176,985
  193,599
  210,923
  228,965
  247,736
  267,254
  287,540
Fixed operating expenses, $m
 
  709
  727
  745
  764
  783
  803
  823
  843
  864
  886
  908
  931
  954
  978
  1,002
  1,027
  1,053
  1,079
  1,106
  1,134
  1,162
  1,191
  1,221
  1,252
  1,283
  1,315
  1,348
  1,382
  1,416
  1,452
Total operating expenses, $m
  1,448
  1,983
  2,692
  3,679
  5,018
  6,781
  9,047
  11,886
  15,367
  19,550
  24,486
  30,204
  36,749
  44,126
  52,344
  61,400
  71,284
  81,983
  93,479
  105,754
  118,789
  132,567
  147,075
  162,300
  178,237
  194,882
  212,238
  230,313
  249,118
  268,670
  288,992
Operating income, $m
  -165
  69
  480
  1,064
  1,864
  2,928
  4,302
  6,032
  8,160
  10,723
  13,751
  17,278
  21,303
  25,845
  30,908
  36,490
  42,585
  49,185
  56,278
  63,854
  71,901
  80,408
  89,366
  98,769
  108,612
  118,894
  129,616
  140,782
  152,400
  164,481
  177,039
EBITDA, $m
  9
  1,059
  2,005
  3,341
  5,165
  7,581
  10,696
  14,612
  19,423
  25,214
  32,053
  39,995
  49,077
  59,322
  70,738
  83,323
  97,064
  111,940
  127,927
  145,000
  163,133
  182,302
  202,487
  223,673
  245,850
  269,014
  293,170
  318,326
  344,500
  371,715
  400,003
Interest expense (income), $m
  66
  759
  1,044
  1,673
  2,557
  3,760
  5,351
  7,398
  9,968
  13,123
  16,918
  21,398
  26,598
  32,543
  39,248
  46,719
  54,952
  63,941
  73,671
  84,128
  95,294
  107,152
  119,688
  132,887
  146,741
  161,242
  176,388
  192,182
  208,630
  225,743
  243,537
Earnings before tax, $m
  -663
  -690
  -564
  -610
  -693
  -832
  -1,049
  -1,366
  -1,808
  -2,400
  -3,166
  -4,120
  -5,295
  -6,698
  -8,340
  -10,229
  -12,367
  -14,756
  -17,393
  -20,274
  -23,393
  -26,745
  -30,322
  -34,118
  -38,129
  -42,348
  -46,773
  -51,400
  -56,230
  -61,262
  -66,498
Tax expense, $m
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -610
  -690
  -564
  -610
  -693
  -832
  -1,049
  -1,366
  -1,808
  -2,400
  -3,166
  -4,120
  -5,295
  -6,698
  -8,340
  -10,229
  -12,367
  -14,756
  -17,393
  -20,274
  -23,393
  -26,745
  -30,322
  -34,118
  -38,129
  -42,348
  -46,773
  -51,400
  -56,230
  -61,262
  -66,498

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  876
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  23,703
  36,657
  56,635
  84,698
  122,893
  173,384
  238,363
  319,952
  420,118
  540,589
  682,808
  847,893
  1,036,631
  1,249,489
  1,486,645
  1,748,030
  2,033,379
  2,342,282
  2,674,241
  3,028,717
  3,405,176
  3,803,130
  4,222,160
  4,661,951
  5,122,300
  5,603,139
  6,104,532
  6,626,689
  7,169,961
  7,734,840
  8,321,958
Adjusted assets (=assets-cash), $m
  22,827
  36,657
  56,635
  84,698
  122,893
  173,384
  238,363
  319,952
  420,118
  540,589
  682,808
  847,893
  1,036,631
  1,249,489
  1,486,645
  1,748,030
  2,033,379
  2,342,282
  2,674,241
  3,028,717
  3,405,176
  3,803,130
  4,222,160
  4,661,951
  5,122,300
  5,603,139
  6,104,532
  6,626,689
  7,169,961
  7,734,840
  8,321,958
Revenue / Adjusted assets
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
  0.056
Average production assets, $m
  18,415
  29,464
  45,522
  68,078
  98,777
  139,360
  191,588
  257,168
  337,677
  434,509
  548,820
  681,509
  833,211
  1,004,299
  1,194,917
  1,405,011
  1,634,365
  1,882,651
  2,149,469
  2,434,385
  2,736,972
  3,056,834
  3,393,637
  3,747,127
  4,117,141
  4,503,624
  4,906,628
  5,326,321
  5,762,985
  6,217,017
  6,688,924
Working capital, $m
  1,161
  852
  1,316
  1,968
  2,856
  4,029
  5,540
  7,436
  9,764
  12,563
  15,868
  19,705
  24,091
  29,038
  34,550
  40,624
  47,256
  54,435
  62,149
  70,387
  79,136
  88,385
  98,123
  108,344
  119,042
  130,217
  141,869
  154,004
  166,630
  179,758
  193,402
Total debt, $m
  21,935
  29,827
  47,808
  73,064
  107,439
  152,881
  211,362
  284,793
  374,942
  483,367
  611,364
  759,940
  929,804
  1,121,376
  1,334,816
  1,570,063
  1,826,877
  2,104,890
  2,403,652
  2,722,681
  3,061,495
  3,419,653
  3,796,780
  4,192,592
  4,606,906
  5,039,661
  5,490,915
  5,960,856
  6,449,801
  6,958,192
  7,486,598
Total liabilities, $m
  25,099
  32,991
  50,972
  76,228
  110,603
  156,045
  214,526
  287,957
  378,106
  486,531
  614,528
  763,104
  932,968
  1,124,540
  1,337,980
  1,573,227
  1,830,041
  2,108,054
  2,406,816
  2,725,845
  3,064,659
  3,422,817
  3,799,944
  4,195,756
  4,610,070
  5,042,825
  5,494,079
  5,964,020
  6,452,965
  6,961,356
  7,489,762
Total equity, $m
  -1,396
  3,666
  5,664
  8,470
  12,289
  17,338
  23,836
  31,995
  42,012
  54,059
  68,281
  84,789
  103,663
  124,949
  148,664
  174,803
  203,338
  234,228
  267,424
  302,872
  340,518
  380,313
  422,216
  466,195
  512,230
  560,314
  610,453
  662,669
  716,996
  773,484
  832,196
Total liabilities and equity, $m
  23,703
  36,657
  56,636
  84,698
  122,892
  173,383
  238,362
  319,952
  420,118
  540,590
  682,809
  847,893
  1,036,631
  1,249,489
  1,486,644
  1,748,030
  2,033,379
  2,342,282
  2,674,240
  3,028,717
  3,405,177
  3,803,130
  4,222,160
  4,661,951
  5,122,300
  5,603,139
  6,104,532
  6,626,689
  7,169,961
  7,734,840
  8,321,958
Debt-to-equity ratio
  -15.713
  8.140
  8.440
  8.630
  8.740
  8.820
  8.870
  8.900
  8.920
  8.940
  8.950
  8.960
  8.970
  8.970
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  9.000
  9.000
  9.000
  9.000
Adjusted equity ratio
  -0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -610
  -690
  -564
  -610
  -693
  -832
  -1,049
  -1,366
  -1,808
  -2,400
  -3,166
  -4,120
  -5,295
  -6,698
  -8,340
  -10,229
  -12,367
  -14,756
  -17,393
  -20,274
  -23,393
  -26,745
  -30,322
  -34,118
  -38,129
  -42,348
  -46,773
  -51,400
  -56,230
  -61,262
  -66,498
Depreciation, amort., depletion, $m
  174
  990
  1,525
  2,277
  3,300
  4,653
  6,394
  8,580
  11,264
  14,491
  18,302
  22,717
  27,774
  33,477
  39,831
  46,834
  54,479
  62,755
  71,649
  81,146
  91,232
  101,894
  113,121
  124,904
  137,238
  150,121
  163,554
  177,544
  192,099
  207,234
  222,964
Funds from operations, $m
  -635
  300
  961
  1,667
  2,607
  3,821
  5,345
  7,214
  9,456
  12,091
  15,135
  18,597
  22,479
  26,779
  31,490
  36,605
  42,111
  47,999
  54,256
  60,872
  67,839
  75,150
  82,799
  90,786
  99,109
  107,773
  116,782
  126,144
  135,870
  145,972
  156,466
Change in working capital, $m
  -231
  319
  464
  652
  888
  1,173
  1,510
  1,896
  2,328
  2,800
  3,305
  3,837
  4,386
  4,947
  5,512
  6,075
  6,632
  7,179
  7,715
  8,238
  8,749
  9,248
  9,738
  10,221
  10,699
  11,175
  11,652
  12,135
  12,626
  13,128
  13,645
Cash from operations, $m
  -404
  -19
  497
  1,015
  1,720
  2,647
  3,835
  5,318
  7,128
  9,291
  11,830
  14,760
  18,093
  21,832
  25,979
  30,530
  35,480
  40,820
  46,541
  52,634
  59,090
  65,901
  73,061
  80,565
  88,411
  96,598
  105,129
  114,009
  123,244
  132,844
  142,821
Maintenance CAPEX, $m
  0
  -614
  -982
  -1,517
  -2,269
  -3,293
  -4,645
  -6,386
  -8,572
  -11,256
  -14,484
  -18,294
  -22,717
  -27,774
  -33,477
  -39,831
  -46,834
  -54,479
  -62,755
  -71,649
  -81,146
  -91,232
  -101,894
  -113,121
  -124,904
  -137,238
  -150,121
  -163,554
  -177,544
  -192,099
  -207,234
New CAPEX, $m
  -4,356
  -11,049
  -16,058
  -22,556
  -30,700
  -40,583
  -52,228
  -65,579
  -80,510
  -96,831
  -114,311
  -132,690
  -151,701
  -171,088
  -190,619
  -210,093
  -229,354
  -248,286
  -266,818
  -284,917
  -302,586
  -319,862
  -336,803
  -353,489
  -370,014
  -386,482
  -403,004
  -419,693
  -436,664
  -454,032
  -471,907
Cash from investing activities, $m
  -4,413
  -11,663
  -17,040
  -24,073
  -32,969
  -43,876
  -56,873
  -71,965
  -89,082
  -108,087
  -128,795
  -150,984
  -174,418
  -198,862
  -224,096
  -249,924
  -276,188
  -302,765
  -329,573
  -356,566
  -383,732
  -411,094
  -438,697
  -466,610
  -494,918
  -523,720
  -553,125
  -583,247
  -614,208
  -646,131
  -679,141
Free cash flow, $m
  -4,817
  -11,683
  -16,543
  -23,058
  -31,249
  -41,228
  -53,038
  -66,647
  -81,954
  -98,796
  -116,965
  -136,223
  -156,326
  -177,030
  -198,116
  -219,394
  -240,708
  -261,945
  -283,032
  -303,931
  -324,642
  -345,193
  -365,637
  -386,046
  -406,508
  -427,122
  -447,996
  -469,238
  -490,964
  -513,287
  -536,320
Issuance/(repayment) of debt, $m
  5,194
  8,139
  17,980
  25,257
  34,375
  45,442
  58,481
  73,431
  90,149
  108,425
  127,997
  148,576
  169,864
  191,572
  213,441
  235,247
  256,814
  278,013
  298,763
  319,028
  338,814
  358,158
  377,127
  395,811
  414,315
  432,754
  451,254
  469,941
  488,944
  508,391
  528,407
Issuance/(repurchase) of shares, $m
  0
  6,381
  2,562
  3,416
  4,512
  5,881
  7,547
  9,525
  11,824
  14,447
  17,388
  20,628
  24,169
  27,984
  32,056
  36,367
  40,902
  45,646
  50,589
  55,722
  61,039
  66,540
  72,225
  78,098
  84,164
  90,432
  96,912
  103,616
  110,557
  117,750
  125,210
Cash from financing (excl. dividends), $m  
  4,908
  14,520
  20,542
  28,673
  38,887
  51,323
  66,028
  82,956
  101,973
  122,872
  145,385
  169,204
  194,033
  219,556
  245,497
  271,614
  297,716
  323,659
  349,352
  374,750
  399,853
  424,698
  449,352
  473,909
  498,479
  523,186
  548,166
  573,557
  599,501
  626,141
  653,617
Total cash flow (excl. dividends), $m
  90
  2,837
  3,999
  5,614
  7,638
  10,095
  12,989
  16,308
  20,019
  24,076
  28,421
  32,981
  37,707
  42,526
  47,380
  52,221
  57,008
  61,714
  66,320
  70,819
  75,211
  79,505
  83,716
  87,863
  91,971
  96,064
  100,171
  104,319
  108,537
  112,854
  117,297
Retained Cash Flow (-), $m
  494
  -6,381
  -2,562
  -3,416
  -4,512
  -5,881
  -7,547
  -9,525
  -11,824
  -14,447
  -17,388
  -20,628
  -24,169
  -27,984
  -32,056
  -36,367
  -40,902
  -45,646
  -50,589
  -55,722
  -61,039
  -66,540
  -72,225
  -78,098
  -84,164
  -90,432
  -96,912
  -103,616
  -110,557
  -117,750
  -125,210
Prev. year cash balance distribution, $m
 
  629
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -2,914
  1,437
  2,198
  3,126
  4,214
  5,443
  6,783
  8,195
  9,629
  11,033
  12,353
  13,538
  14,542
  15,324
  15,853
  16,106
  16,067
  15,731
  15,097
  14,172
  12,965
  11,491
  9,766
  7,807
  5,632
  3,259
  703
  -2,020
  -4,896
  -7,913
Discount rate, %
 
  16.10
  16.91
  17.75
  18.64
  19.57
  20.55
  21.58
  22.65
  23.79
  24.98
  26.23
  27.54
  28.91
  30.36
  31.88
  33.47
  35.14
  36.90
  38.75
  40.68
  42.72
  44.85
  47.10
  49.45
  51.92
  54.52
  57.25
  60.11
  63.11
  66.27
PV of cash for distribution, $m
 
  -2,510
  1,052
  1,347
  1,578
  1,724
  1,774
  1,728
  1,600
  1,411
  1,187
  953
  731
  535
  374
  250
  159
  96
  55
  30
  15
  7
  3
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  29.4
  18.4
  12.0
  8.1
  5.6
  4.0
  2.9
  2.2
  1.7
  1.3
  1.0
  0.8
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0

Cheniere Energy, Inc. (Cheniere) is an energy company primarily engaged in liquefied natural gas (LNG)-related businesses. The Company operates through two segments: LNG terminal business, and LNG and natural gas marketing business. Its LNG terminal segment consists of the Sabine Pass and Corpus Christi LNG terminals. Its LNG and natural gas marketing segment consists of LNG and natural gas marketing activities by Cheniere Marketing. Cheniere Marketing is developing a portfolio of long- and medium-term SPAs with professional staff based in the United States, the United Kingdom, Singapore and Chile. The Company conducts its business through its subsidiaries, including the development, construction and operation of its LNG terminal business and the development and operation of its LNG and natural gas marketing business. The Company owns and operates the Sabine Pass LNG terminal in Louisiana through its ownership interest in and management agreements with Cheniere Partners.

FINANCIAL RATIOS  of  Cheniere Energy (LNG)

Valuation Ratios
P/E Ratio -22.7
Price to Sales 10.8
Price to Book -9.9
Price to Tangible Book
Price to Cash Flow -34.3
Price to Free Cash Flow -2.9
Growth Rates
Sales Growth Rate 373.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36.4%
Cap. Spend. - 3 Yr. Gr. Rate 6.9%
Financial Strength
Quick Ratio 4
Current Ratio 0.9
LT Debt to Equity -1553.6%
Total Debt to Equity -1571.3%
Interest Coverage -9
Management Effectiveness
Return On Assets -2.6%
Ret/ On Assets - 3 Yr. Avg. -4.3%
Return On Total Capital -3.5%
Ret/ On T. Cap. - 3 Yr. Avg. -6.2%
Return On Equity 53.1%
Return On Equity - 3 Yr. Avg. -2204.7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 34.5%
Gross Margin - 3 Yr. Avg. 57.9%
EBITDA Margin -33%
EBITDA Margin - 3 Yr. Avg. -198.2%
Operating Margin -12.9%
Oper. Margin - 3 Yr. Avg. -122.8%
Pre-Tax Margin -51.7%
Pre-Tax Margin - 3 Yr. Avg. -237.7%
Net Profit Margin -47.5%
Net Profit Margin - 3 Yr. Avg. -203.9%
Effective Tax Rate -0.3%
Eff/ Tax Rate - 3 Yr. Avg. -0.3%
Payout Ratio 0%

LNG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LNG stock intrinsic value calculation we used $1283 million for the last fiscal year's total revenue generated by Cheniere Energy. The default revenue input number comes from 2016 income statement of Cheniere Energy. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our LNG stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 16.1%, whose default value for LNG is calculated based on our internal credit rating of Cheniere Energy, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Cheniere Energy.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of LNG stock the variable cost ratio is equal to 62.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $692 million in the base year in the intrinsic value calculation for LNG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Cheniere Energy.

Corporate tax rate of 27% is the nominal tax rate for Cheniere Energy. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the LNG stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for LNG are equal to 1435.3%.

Life of production assets of 106.3 years is the average useful life of capital assets used in Cheniere Energy operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for LNG is equal to 41.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-1396 million for Cheniere Energy - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 239.599 million for Cheniere Energy is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Cheniere Energy at the current share price and the inputted number of shares is $13.9 billion.

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COMPANY NEWS

▶ LNG: Glut Today, Shortage Tomorrow   [Feb-07-18 04:00PM  Oilprice.com]
▶ Is Cheniere Energy, Inc. a Buy in 2018?   [06:47AM  Motley Fool]
▶ OPEC Drives Oil Prices Back Up   [Jan-23-18 03:00PM  Oilprice.com]
▶ Where Cheniere Energy Could Trade in the Next 7 Days   [Jan-22-18 12:25PM  Market Realist]
▶ Is Cheniere Energy, Inc. (LNG) a Buy?   [Jan-14-18 08:30AM  Motley Fool]
▶ Where Cheniere Energy Could Trade in the Next 7 Days   [Jan-03-18 01:15PM  Market Realist]
▶ Whats Driving Cheniere Energys Recent Rally?   [10:12AM  Market Realist]
▶ 3 Stocks to Buy With Dividends Yielding More Than 6%   [Dec-28-17 07:59AM  Motley Fool]
▶ What Wall Street Analysts Recommend for Cheniere Energy   [Dec-27-17 10:30AM  Market Realist]
▶ Why Cheniere Energys High Leverage Remains a Concern   [Dec-26-17 10:31AM  Market Realist]
▶ Cheniere Energys Expected Growth in 2018   [09:02AM  Market Realist]
▶ How Does the Global LNG Market Look in 2018?   [Dec-25-17 10:32AM  Market Realist]
▶ 3 Stocks You Can Buy and Hold for the Next Decade   [Dec-24-17 08:37AM  Motley Fool]
▶ Cheniere Energy Earns Relative Strength Rating Upgrade   [Dec-22-17 03:00AM  Investor's Business Daily]
▶ Why Saudi Arabia Is Now Shopping Around For U.S. Shale Assets   [Dec-20-17 01:19PM  Investor's Business Daily]
▶ What the EIA Expects for US Natural Gas and LNG Exports   [Dec-18-17 09:15AM  Market Realist]
▶ Cheniere Energy Sees IBD RS Rating Rise To 73   [03:00AM  Investor's Business Daily]
▶ Analysts Recommendations for Cheniere Energy   [Dec-11-17 01:25PM  Market Realist]
▶ Can Cheniere Energy Gain Upward Momentum?   [10:20AM  Market Realist]
▶ Why Oil Prices Bounced Back   [Dec-08-17 03:00PM  Oilprice.com]
▶ The 'Savior' Natural Gas Stocks Have Been Waiting For   [Dec-06-17 08:32AM  Motley Fool]
▶ Can Cheniere Energy Partners Gain Upward Momentum?   [Nov-28-17 12:15PM  Market Realist]
▶ Why CQH Outperformed Cheniere Energy and CQP in 2017   [Nov-17-17 05:37PM  Market Realist]
▶ 3 Top Oil Stocks to Buy in November   [07:33PM  Motley Fool]
▶ Where Cheniere Energy Could Trade from Here   [Nov-14-17 05:05PM  Market Realist]
▶ Can Cheniere Energy Gain Upward Momentum?   [03:35PM  Market Realist]
▶ Cheniere Energy reports 3Q loss   [08:15AM  Associated Press]
▶ Cheniere Energy Getting Closer To Key Technical Benchmark   [Nov-07-17 03:00AM  Investor's Business Daily]
Financial statements of LNG
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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