If you’re considering what to do with Cheniere Energy stock right now, you’re not alone. This is one of those companies that keeps finding its way back into savvy investors’ conversations, and for good reason. Let’s cut to the chase: the shares have leapt 372.9% over the past five years. That sort of performance doesn’t just happen by accident. Even this past year, when many energy stocks have lacked clear direction, Cheniere is up 20.2%. There’s been a brief pause in the last month, with the stock off by 3.7%, but those short-term dips can spell opportunity for the long-term crowd.
What’s been driving renewed interest? Part of it has to do with bigger market developments, such as ongoing shifts in natural gas demand and the global rethinking of energy security. Cheniere sits right in the thick of those trends. Short-term choppiness hasn’t rattled its long-term growth story. A 3.1% year-to-date return underscores that steady confidence. And when we dive into whether the stock is actually undervalued, here’s an early spoiler: by the numbers, Cheniere hits the mark on 5 out of the 6 major valuation checks.
But before you go rushing to any conclusions, let’s break down exactly what those valuation methods are, why they matter, and whether a simple score really tells the whole story. In fact, there’s an even better way to look at valuation that too many people ignore, and we’ll get to that at the end.
The Discounted Cash Flow (DCF) model is one of the most recognized tools for stock valuation because it estimates a company’s intrinsic value based on the cash flows it is expected to generate in the future and then discounts those back to today’s dollars. In essence, it asks: what are future cash flows worth right now?
For Cheniere Energy, the DCF model uses a 2 Stage Free Cash Flow to Equity approach. The company’s most recent trailing twelve-month Free Cash Flow stands at $3.13 billion. Analysts project solid annual growth in free cash flow. While direct estimates are available for only the next five years, cash flows for the years beyond are extrapolated using industry norms. According to these projections, Cheniere’s annual free cash flow could reach $4.73 billion by the end of 2029.
With all future free cash flows aggregated and discounted, the estimated fair value for Cheniere Energy’s stock comes out to $470.27 per share. This suggests the stock is trading at a 51.7% discount to its intrinsic value using this DCF method.
