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Will Cheniere Energy Partners (CQH) Beat on Q4 Earnings? - Analyst Blog

Cheniere Energy Partners LP Holdings LLC (CQH) is expected to report fourth-quarter 2014 results on Feb 20.

In the last four quarters, the company delivered a positive earnings surprise of 72.22%. 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 (CQP), primarily operates 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 company 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. The same was applicable for the fourth quarter.

Hence, we can say that the business environment was favorable for the company 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 an earnings beat.

Earnings Whispers

Our proven model does not conclusively show that Cheniere Energy Partners LP Holdings is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.  

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

Zacks Rank: The company carries a Zacks Rank #3 (Hold). But a 0.00% ESP leaves our surprise prediction inconclusive.

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

Stocks to Consider

Here are some companies for investors to consider, that, according to our model have the right combination of elements to post an earnings beat this quarter:  

Bill Barrett Corp. (BBG) with an Earnings ESP of +100.00% and a Zacks Rank #3.        

Ferrellgas Partners LP (FGP) with an Earnings ESP of +1.82% and a Zacks Rank #3.


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