US LPG Exports Will Power Future VLGC Fleet Success

Key Takeaways

• Rising LPG demand and decarbonization trends position the company for strong utilization, favorable rates, and improved margins.
  
• Prudent fleet management and a robust financial foundation support operational efficiency and flexible capital allocation.
  
• Exposure to geopolitical, regulatory, and market risks threatens freight rates, fleet utilization, and margin stability, challenging DorianG's earnings visibility and long-term growth prospects.

Catalysts

Engages in the transportation of liquefied petroleum gas through its LPG tankers worldwide.

• Ongoing growth in U.S. LPG exports-supported by the expansion of U.S. fractionation plants, export terminal capacity, and high NGL output-should drive sustained demand for DorianG's VLGC fleet, positively impacting future revenue and fleet utilization.
  
• The increasing role of LPG as a lower-carbon "transition fuel" and as an economically attractive marine fuel (especially for dual-fuel vessels) is expected to support steady or rising shipping volumes and favorable charter rates, bolstering long-term earnings and net margins.
  
• DorianG's ongoing investments in enhancing fleet energy efficiency, retrofitting vessels for ammonia carriage, and early compliance with IMO decarbonization targets position the company to benefit from tightening environmental regulations, supporting improved margins and lower compliance costs.
  
• Modern fleet management-with the majority of dry dockings complete, continuous performance monitoring, and a disciplined dry docking approach-should minimize operational disruptions and optimize vessel availability, improving revenue reliability and long-term cost control.
  
• A strong balance sheet, substantial free cash generation, and consistent shareholder returns through dividends underpin capital allocation flexibility, supporting potential future EPS growth from either fleet expansion, debt reduction, or continued capital returns.

DorianG Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming DorianG's revenue will grow by 2.6% annually over the next 3 years.
• Analysts assume that profit margins will increase from 15.3% today to 34.5% in 3 years time.
• Analysts expect earnings to reach $119.5 million (and earnings per share of $1.76) by about August 2028, up from $49.0 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.0x on those 2028 earnings, down from 26.6x today. This future PE is greater than the current PE for the US Oil and Gas industry at 12.6x.
• Analysts expect the number of shares outstanding to grow by 0.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.57%, as per the Simply Wall St company report.

DorianG Future Earnings Per Share Growth

Risks

• The company's performance and share price remain highly sensitive to geopolitical volatility (e.g., Middle East hostilities, global tariffs), which create substantial swings in freight rates and uncertainty for long-term revenue and earnings visibility.
  
• The possibility of ethane carriers shifting into the VLGC market, should U.S. ethane exports be disrupted, presents an overhang and could lead to excess vessel supply, depressing charter rates and negatively impacting DorianG's fleet utilization and revenue.
  
• Sector reliance on ongoing U.S. LPG production growth and export terminal expansion could become a risk if global decarbonization pressures accelerate, potentially constraining future demand for LPG shipping and impacting long-term top-line growth.
  
• Increasingly stringent environmental compliance requirements (IMO, FuelEU, ETS, CII regulations), while referenced as being managed currently, are likely to result in rising operational and retrofitting costs, which could erode net margins unless offset by higher rates or operational savings.
  
• Market overcapacity risk persists, with spot market exposure exceeding 93% for DorianG's fleet-this creates earnings volatility as sustained periods of weak spot rates or industry overcapacity would pressure both revenue and earnings stability.

Valuation

• The analysts have a consensus price target of $34.25 for DorianG based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $346.2 million, earnings will come to $119.5 million, and it would be trading on a PE ratio of 15.0x, assuming you use a discount rate of 7.6%.
  
• Given the current share price of $30.58, the analyst price target of $34.25 is 10.7% 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.