Golar LNG (NasdaqGS:GLNG) Valuation Spotlight as Contract Wins and Commodity Upside Fuel Investor Interest

If you’re looking at Golar LNG (NasdaqGS:GLNG) and wondering what’s behind the recent wave of interest, you’re not alone. The catalyst this time is new commentary centering on the company’s deep backlog of contracted floating LNG (FLNG) projects and a fresh MKII contract, both of which come with the promise of commodity-linked upside. Investors are also taking note of unique contract structures that essentially function like a long-term call option on LNG prices, putting a spotlight on Golar’s asymmetric reward potential. At the same time, concerns remain about project execution and the ongoing need for funding. These are two risks that are hard to ignore in the current environment.

Against this backdrop, Golar LNG’s share price has fully rebounded after a dip earlier in the year, rising almost 4% this past month and now up a strong 37% for the past twelve months. That kind of performance suggests momentum has turned around, especially as the market absorbs news of growth catalysts and contract wins. Looking back, the multi-year picture shows significant compounding returns, suggesting that longer-term investors have already been rewarded for patience. However, short-term price swings reflect evolving market perceptions of risk and reward.

With so much attention on Golar’s pipeline and these long-dated contracts, the question is whether the stock is still undervalued or if the market has already started pricing in years of future growth.

Most Popular Narrative: 18.4% Undervalued

The current most widely followed narrative suggests that Golar LNG is trading at a significant discount to its estimated fair value. This indicates a potential opportunity for investors who believe in the company's growth outlook.

"The company has secured long-term (20-year) charters for its existing FLNG units, providing $17 billion in contracted EBITDA backlog and 20 years of cash flow visibility. This is expected to drive a significant (4x) increase in EBITDA and contracted free cash flow by 2028, indicating the market may be undervaluing its forward earnings stability and revenue growth."

Want to see what’s fueling this bullish call? There is a secret sauce of long-haul contracts, record backlog, and a cash flow trajectory most rivals envy. Curious which massive assumptions lock in the price target, or just how aggressive the profit projections get behind this value gap? Uncover the bold numbers that make this narrative so compelling for Golar LNG’s future.

Result: Fair Value of $51.10 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks such as regulatory hurdles and overcapacity in the FLNG sector could quickly challenge the optimism surrounding Golar LNG's long-term value story.

Find out about the key risks to this Golar LNG narrative.

Another View: Testing the Undervaluation Case

While analysts lean on growth potential for their price targets, our DCF model paints a much more cautious picture. This approach suggests Golar LNG may actually be overvalued if cash flows fall short of optimistic assumptions. Which view holds up under scrutiny?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Golar LNG to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Golar LNG Narrative

If you see things differently, or want to dig into the numbers on your own, you can put together your own narrative in just a few minutes. Do it your way

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.

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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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