Cheniere Energy Partners (CQH): Q1 Earnings To Surprise?

Midstream partnership Cheniere Energy Partners LP Holdings LLC (NYSE:CQH) is expected to release first-quarter 2017 results around Thursday, May 4.

In each of the last four quarters, the partnership delivered in-line results.

Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

Cheniere Energy Partners LP Holdings, by virtue of its 55.9% ownership in Cheniere Energy Partners LP (NYSE:CQP) , primarily operates the Sabine Pass natural gas regasification and liquefaction facilities. Cheniere Energy Partners LP Holdings also operates Creole Trail Pipeline located in Louisiana. This solid asset base might help the partnership to earn sufficiently for its shareholders.

Moreover, the fate of the midstream player’s business is positively correlated with natural gas production. The output of the commodity in the U.S. has been booming owing to hydraulic fracturing (or fracking) and sophisticated horizontal drilling techniques. In fact, it has been an oversupplied market for the commodity over the past few quarters. The same is applicable for the first quarter.

Hence, we can say that the business environment was favorable for the partnership as higher production of natural gas usually increases the need for regasification, liquefaction and transportation activities. Yet, we have to wait for the final earnings release to find out whether this increase in output translates into a positive surprise.

Earnings Whispers

Our proven model does not conclusively show that Cheniere Energy Partners LP Holdings will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 2 cents, resulting in an Earnings ESP of 0.00%.

Zacks Rank: Cheniere Energy Partners LP Holdings has a Zacks Rank #2. Though a favorable Zacks Rank increases the predictive power of ESP, the partnership’s ESP of 0.00% makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

While earnings beat looks uncertain for Cheniere Energy Partners LP Holdings, here are some firms from the energy space you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this quarter:

PBF Logistics L.P. (NYSE:PBFX) has an Earnings ESP of +10.91% and a Zacks Rank #1. The partnership is expected to release earnings results on May 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Global Partners L.P. (NYSE:GLP) has an Earnings ESP of +233.33% and a Zacks Rank #1. The partnership is anticipated to release earnings on May 9.

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