Delivering A High-Capacity FSRU In 2026 Will Capitalize On Tight LNG Market

Key Takeaways

• Strategic investments in LNG import terminals and downstream infrastructure aim to diversify revenue streams and potentially enhance future net margins.
  
• Excelerate Energy's strong liquidity enables pursuit of growth opportunities without compromising stability, supporting future earnings growth amidst geopolitical LNG demand.
  
• Transitioning FSRU operations and converting LNG carriers present execution risks, while geopolitical reliance and tight supply-demand could impact revenue and growth prospects.

Catalysts

Provides liquefied natural gas (LNG) solutions worldwide.

• Excelerate Energy's planned delivery of a new high-capacity FSRU in 2026, capable of delivering 1 billion cubic feet per day, is expected to capitalize on tight supply-demand conditions in the LNG market, potentially boosting future revenue from expanded regasification capacity.
  
• Strategic initiatives, including LNG import terminal investments and downstream infrastructure expansion, aim to enhance market presence and unlock new revenue streams beyond the core FSRU business, potentially impacting future net margins through diversification.
  
• The company's pursuit of LNG carrier acquisitions for potential FSRU conversions offers a flexible, lower-capital option to quickly address diverse market needs, potentially resulting in accelerated earnings growth through more rapid market responsiveness.
  
• Excelerate Energy's strong financial position, characterized by significant liquidity and cash flow, provides the ability to pursue strategic growth opportunities and capital projects without compromising financial stability, supporting future earnings growth.
  
• The current macroeconomic environment, with geopolitical factors driving demand for LNG infrastructure, positions Excelerate Energy to benefit from increased long-term contracting opportunities, potentially increasing stability in future EBITDA and net margins.

Excelerate Energy Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Excelerate Energy's revenue will grow by 22.7% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 3.9% today to 3.3% in 3 years time.
• Analysts expect earnings to reach $51.9 million (and earnings per share of $2.44) by about March 2028, up from $32.9 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 68.9x on those 2028 earnings, up from 20.6x today. This future PE is greater than the current PE for the US Oil and Gas industry at 12.7x.
• Analysts expect the number of shares outstanding to decline by 4.92% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.67%, as per the Simply Wall St company report.

Excelerate Energy Future Earnings Per Share Growth

Risks

• The transition of the FSRU Sequoia from gas sales in Brazil to a Time Charter Party Agreement could potentially impact revenue streams, as the transition may not immediately match the profit levels of prior operations.
  
• There are execution risks and uncertainties around the acquisition and conversion of LNG carriers into FSRUs, which could lead to delays or additional costs impacting operational earnings and capital expenditures.
  
• There's heavy reliance on maintaining a high reliability rate and the strategic timing of dry docks, which if not managed well, could affect earnings due to possible unplanned downtime or increased maintenance costs.
  
• The FSRU supply-demand balance is expected to remain tight, creating potential for increased competition which could squeeze margins or delay planned expansions, thus impacting future revenue growth.
  
• Dependence on favorable geopolitical conditions and demand in specific regions like Europe and the Americas poses risks; adverse changes could affect contract negotiations, fleet deployments, and ultimately overall revenue.

Valuation

• The analysts have a consensus price target of $31.5 for Excelerate Energy based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $37.0, and the most bearish reporting a price target of just $22.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.6 billion, earnings will come to $51.9 million, and it would be trading on a PE ratio of 68.9x, assuming you use a discount rate of 7.7%.
• Given the current share price of $28.35, the analyst price target of $31.5 is 10.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.