Golar LNG (GLNG): Profitability Forecasts Test Premium Valuation Narrative Ahead of Earnings

Golar LNG (GLNG) remains unprofitable, but the company has managed to shrink its losses by 4.6% per year over the past five years. Looking ahead, analysts project annual earnings growth of 51.12%, with expectations for profitability within the next three years. However, the company’s revenue growth forecast of 7.1% per year is behind the broader US market rate of 10.5%.

See our full analysis for Golar LNG.

The next step is to see how these headline numbers compare to the widely followed narratives in the market. Some expectations may get confirmed, while others could be called into question.

See what the community is saying about Golar LNG

Long-Term Contracts Drive $17 Billion Revenue Backlog

• Golar LNG has secured $17 billion in contracted EBITDA backlog from long-term charters on its existing FLNG units, providing two decades of predictable cash flow. Analysts say this will quadruple EBITDA and contracted free cash flow by 2028.
• According to the analysts' consensus view, these contracts strongly support the case for sustained growth and market leadership, but there is tension around future customer demand and the durability of high utilization rates.
  • On one hand, consensus notes Golar's dominance in the global FLNG market positions it to benefit from emerging market demand and premium contracting, providing reliable revenue visibility over a 20-year horizon.
  • However, bears counter that dependence on a small set of large contracts and counterparties across varied political and regulatory regions introduces risks. These risks could threaten revenue stability in the event of renegotiations or adverse shifts in LNG demand.

Consensus sees these contracts as the linchpin of future growth, but warns execution and external shocks could unravel even the best-laid plans. 📊 Read the full Golar LNG Consensus Narrative.

Profit Margins Poised for a 50% Turnaround

• Analysts are forecasting profit margins to reverse from -2.4% today to 47.2% by 2028, a swing that, if realized, would place Golar well above the industry average for the US Oil and Gas sector.
• The consensus narrative argues this anticipated margin lift is underpinned by favorable contract structures and commodity upside, but warns that overall growth hinges on these high-margin projections materializing.
  • Consensus highlights the upside potential of Golar’s profit-sharing mechanisms, which start above $8 per MMBtu, suggesting asymmetric earnings growth if global LNG prices hold.
  • Still, the risk remains that rising competition or regulatory delays in deploying new FLNG units could compress margins. Analysts urge investors to track actual unit deployment or pricing milestones instead of relying solely on forecasts.

Share Price Trades at 2.4x Analyst Target and Premium Valuation

• At $39.62, Golar LNG's share price is more than double its DCF fair value of $16.61 and trades at a Price-To-Sales ratio of 15.1x, which is notably higher than the US Oil and Gas industry average of 1.5x and peer average of 2.2x.
• Analysts' consensus narrative sees the stock's premium as justified by strong growth forecasts and a 19% gap to the analyst price target of $51.79, but the case depends on actual delivery of $205 million in earnings by 2028 and profitable capital allocation.
  • Consensus points out the implied PE ratio of 29.3x for 2028 would still put Golar well above its sector median. Any disappointment in EPS growth or contract execution could spark a re-rating down to industry norms.
  • Despite these valuation risks, analysts note that sustained clean energy demand and new FLNG project wins could close the valuation gap and support a higher trading range if business execution aligns with bullish projections.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Golar LNG on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Golar LNG research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

See What Else Is Out There

Despite impressive growth forecasts, Golar LNG's current premium valuation and dependence on flawless contract execution expose investors to significant downside if ambitious targets are missed.

If you want to sidestep those valuation risks, check out these 836 undervalued stocks based on cash flows to spot stocks trading below their intrinsic value with better upside potential.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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