LFG Stock Overview
Archaea Energy Inc. operates as a renewable natural gas (RNG) and renewable electricity producer in the United States.
Archaea Energy Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$18.36|
|52 Week High||US$23.75|
|52 Week Low||US$12.59|
|1 Month Change||-8.79%|
|3 Month Change||17.62%|
|1 Year Change||-6.80%|
|3 Year Change||n/a|
|5 Year Change||n/a|
|Change since IPO||78.95%|
Recent News & Updates
Archaea Energy: A Unique Energy Player That's Worth A Good Look
Summary Archaea Energy is an innovative energy business that is tackling a very niche market. Archaea is difficult to value today, but it's growing rapidly and its long-term outlook appears promising. All things considered, LFG stock seems to be a great prospect for energy-oriented investors to consider. Most people who think about natural gas certainly view it as a non-renewable energy that the world hopes to eventually wean itself off of. Having said that, the picture is far more complicated than that. In addition to traditional natural gas, there's also something known as RNG, or renewable natural gas. And one company dedicated to its production and sale is Archaea Energy (LFG). At this point in time, the enterprise is still small compared to many other energy companies. But it's undergoing significant change at a rapid pace. If the company can truly achieve what it has started out to do, then it's not unthinkable that further upside could be around the table before too long. With the path for the company looking straightforward, and shares already priced at reasonable levels for such a rapidly growing business, I cannot help but to rate the enterprise a 'buy' at this moment. Archaea Energy - A player in renewable natural gas As I mentioned already, Archaea Energy is a company that's focused on the production and sale of RNG. Unlike traditional natural gas, the natural gas that Archaea Energy produces primarily comes from landfill-sourced biogas that is collected and processed so that impurities can be removed. The reason why biogas is referred to as renewable is because, unlike coming from deposits within the earth, it is sourced from landfills, livestock farms, wastewater resource recovery facilities, organic waste operations, and even forest and wood products. But as I mentioned already, the landfill-sourced biogas is what Archaea Energy specializes in. At first glance, this may be viewed as a very niche area. But the opportunity seems to be massive. According to the EPA, there are an estimated 2,600 landfills across the US, with roughly 500 of them having operational gas collecting and processing facilities. Some even have multiple such facilities, leading to an estimated 550 locations nationwide. Of course, not all of these are useful for Archaea Energy's purpose. In fact, only 72 of these facilities are focused on RNG, while the remainder are focused on taking landfill gas and turning it directly into electricity. This is an area that Archaea Energy sees particular promise in, essentially helping to convert these landfill gas-to-electric facilities into RNG production facilities. And naturally, the landfills that do not yet have any such facility also make for attractive targets. In addition to generating revenue off of the production and sale of RNG, the company also generates revenue off of the sale of RINs, or renewable identification numbers. These are credits used for compliance, with the particular numbers assigned to each gallon of renewable fuel that's produced. The company also is involved in other similar schemes that it refers to as environmental attributes. And finally, a significant chunk of its revenue comes from the production of power, with revenue there generated by selling renewable electricity and the environmental attributes that are specific to that activity. As a value-oriented investor, I like to put a great deal of emphasis on the fundamental condition of any company that I research. But firms like Archaea Energy prove to be exceptionally difficult. This is because of two reasons. First and foremost, this is a fairly small player that has had, up until very recently, almost no revenue and that has been generating significant net losses and cash outflows. Second, it is undergoing significant rapid change that should create great upside potential if all goes according to plan. Neither of these conditions are very conducive for value analysis. At the same time, however, some discussion of the company's fundamental past should prove illustrative. Author - SEC EDGAR Data Back in 2021, Archaea Energy generated only $77.1 million in sales. Those small for a business with a $2.36 billion market capitalization as of this writing, it's significantly higher than the $6.5 million generated one year earlier. This massive increase in sales was driven by a variety of factors. But the single largest, by far, involved the commencement of commercial operations in April of 2021 at its Boyd County facility, the purchase of PEI power assets, and the acquisition of a firm called Aria. All of this alone requires some further detail. Specifics regarding the formation of the enterprise that exists today have been covered in great detail by other authors, such as here and here. Odds are if you are familiar with Archaea Energy, you already have some background on that matter. In short, however, the company has really truly formed as a result of the combination of several other properties. These combinations resulted in, by the end of the 2021 fiscal year, the business owning, either on a wholly owned basis or through joint ventures, a portfolio of 29 landfill gas recovery and processing facilities spread across 18 states. That included 11 operated facilities that produce pipeline quality RNG and 18 facilities that focused on renewable electricity production. On the bottom line, the picture for the company looks quite dubious. Last year, it generated a loss of $18.7 million. That compared to the $2.5 million loss incurred in 2020. Operating cash flow went from negative $5.8 million to negative $28.1 million, while EBITDA turned from negative $2.1 million to negative $10.1 million. Author - SEC EDGAR Data To see what I mean by referring to the company as a rapidly growing enterprise, we need only look at its most recent financial performance. In the second half of the 2022 fiscal year, sales came in strong at $134.1 million. $77.2 million of this was generated in the second quarter alone. Although this rapid increase in sales compared to the $6.8 million generated in the first half of 2021 and the $5.1 million generated in the second quarter of 2021 alone, might be viewed as extreme, it's worth noting that sales in the second quarter missed analysts' expectations by $2.28 million. According to management, this significant increase in revenue was driven largely by the company's acquisitions, activities that ultimately resulted in significant increases in energy sold. In the second quarter of this year, for instance, the firm sold 1,755,145 MMBtu of RNG, while electricity sold totaled 142,977 MWh. The same time one year earlier, these numbers were 47,592 MMBtu and 47,847 MWh, respectively. The acquisition of Aria contributed $48.1 million of the sales increase for the company in the second quarter, comprising the largest chunk of the company's expansion. Author - SEC EDGAR Data On the bottom line, meanwhile, the company did post some interesting results. Net income came in positive at $22 million during the second quarter, pushing profitability for the first half of the year as a whole up to $3.5 million. On a per-share basis, the company generated a profit of $0.27. That beat analysts' expectations by $0.24 per share. But if we look at the picture from an adjusted basis, the company did miss expectations by $0.12 per share. Operating cash flow in the latest quarter went from negative $5.1 million to positive $38.2 million, while in the first half it rose from negative $7.5 million to positive $56.7 million. Meanwhile, EBITDA turned from negative $7 million to positive $50.2 million, while for the first half of the year it went from negative $9.5 million to positive $32.2 million. Archaea Energy All of this is important for investors to know. But given the rapid change management is pushing, what's more important is where the company seems to be going. Through various acquisitions and continued organic growth, the company is truly focused on transforming itself. There are multiple things that could be brought up along these lines to illustrate what I mean. For instance, this year alone, the company is working to optimize its existing asset base through the deployment of $100 million spread across no fewer than 11 of its different projects. That alone is forecasted to add $103 million in EBITDA to the company. Its activities involve improved plant design for its RNG facilities aimed at reducing RNG development costs by 45% compared to industry averages. More details about this can be seen in the image below. Archaea Energy Another big catalyst for the company is its joint venture with Republic Services (RSG), which is certainly one of the largest waste-oriented firms out there. This particular joint venture, known as Lightning Renewables, will result in $1.1 billion being used to develop RNG facilities at 39 landfill sites owned or operated by Republic, with Archaea Energy ultimately owning 60% of the joint venture entity. Of course, this is an evolving relationship. In July of this year, the entity in question purchased an additional site at Fort Wayne for $38 million. It's also important to note that, as of the end of the latest quarter, Archaea Energy has already made its initial capital contribution of $222.5 million to the joint venture, an amount that included its share of the Fort Wayne acquisition. Also, in July of 2022, Archaea Energy completed the acquisition of NextGen Power Holdings in a deal that ultimately added 14 landfill gas to electric plants to the company's asset platform and that will allow it to develop 11 RNG development projects at sites moving forward. Archaea Energy Management has big plans for the future as well. For starters, the company hopes to engage in RNG development projects in 2023. They are also hoping to reduce costs in a way that should add $20 million or more in additional EBITDA to their bottom line. And they want to pave the way, from an organic perspective, to $1 billion or more in annualized EBITDA. Right now, the company already sees a path, 6 to 8 years out into the future, of $600 million in EBITDA per annum. That's 50% higher than what the company's prior projected timeline implied in March of this year. But of course, this will take time and capital. For the 2022 fiscal year, the company is expecting EBITDA of between $132.5 million and $147.5 million. That should be based on RNG production sold of between 10.4 million MMBtu and 11.4 million MMBtu. For 2022, the company hopes for EBITDA to be even higher at $200 million or more.
Archaea Energy GAAP EPS of -$0.18, revenue of $77.22M, updates FY guidance
Archaea Energy press release (NYSE:LFG): Q2 GAAP EPS of -$0.18. Revenue of $77.22M (+1405.3% Y/Y). Adjusted EBITDA of $30.1M Produced and sold 2.04 million MMBtu of RNG for the three months ended June 30, 2022 and 3.58 million MMBtu of RNG for the six months ended June 30, 2022. Produced and sold 159 thousand MWh of electricity for the three months ended June 30, 2022 and 324 thousand MWh of electricity for the six months ended June 30, 2022. Increased full year 2022 Adjusted EBITDA guidance range to $132.5 million – $147.5 million from $125M-$145M. Increased full year 2022 capital expenditures (excluding acquisition costs) guidance range to $325 million – $365 million, from $255 million – $285 million previously, to begin development on recent additions to the Company’s development backlog. Reaffirmed full year 2022 electricity production sold guidance of 850 thousand – 950 thousand MWh. Updated full year 2022 RNG production sold guidance range to 10.4 million – 11.4 million MMBtu.
|LFG||US Oil and Gas||US Market|
Return vs Industry: LFG underperformed the US Oil and Gas industry which returned 28% over the past year.
Return vs Market: LFG exceeded the US Market which returned -23.7% over the past year.
|LFG Average Weekly Movement||7.8%|
|Oil and Gas Industry Average Movement||8.1%|
|Market Average Movement||6.9%|
|10% most volatile stocks in US Market||15.7%|
|10% least volatile stocks in US Market||2.8%|
Stable Share Price: LFG is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 8% a week.
Volatility Over Time: LFG's weekly volatility (8%) has been stable over the past year.
About the Company
Archaea Energy Inc. operates as a renewable natural gas (RNG) and renewable electricity producer in the United States. It owns and operates a diversified portfolio of 23 landfill gas recovery and processing projects across 12 states, including 13 projects that collectively generate approximately 177.3 MW of electric capacity and 10 projects that have capacity to produce approximately 27,480 million of British thermal units per day of pipeline-quality RNG. The company was founded in 2018 and is based in Houston, Texas.
Archaea Energy Fundamentals Summary
|LFG fundamental statistics|
Is LFG overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|LFG income statement (TTM)|
|Cost of Revenue||US$120.20m|
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
|Earnings per share (EPS)||-0.13|
|Net Profit Margin||-5.22%|
How did LFG perform over the long term?See historical performance and comparison
Is LFG undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 1/6
Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for LFG?
Other financial metrics that can be useful for relative valuation.
|What is LFG's n/a Ratio?|
Price to Sales Ratio vs Peers
How does LFG's PS Ratio compare to its peers?
|LFG PS Ratio vs Peers|
|Company||PS||Estimated Growth||Market Cap|
DK Delek US Holdings
CVI CVR Energy
GPRE Green Plains
OPAL OPAL Fuels
LFG Archaea Energy
Price-To-Sales vs Peers: LFG is expensive based on its Price-To-Sales Ratio (7.6x) compared to the peer average (0.5x).
Price to Earnings Ratio vs Industry
How does LFG's PE Ratio compare vs other companies in the US Oil and Gas Industry?
Price-To-Sales vs Industry: LFG is expensive based on its Price-To-Sales Ratio (7.6x) compared to the US Oil and Gas industry average (1.4x)
Price to Sales Ratio vs Fair Ratio
What is LFG's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PS Ratio||7.6x|
|Fair PS Ratio||2.2x|
Price-To-Sales vs Fair Ratio: LFG is expensive based on its Price-To-Sales Ratio (7.6x) compared to the estimated Fair Price-To-Sales Ratio (2.2x).
Share Price vs Fair Value
What is the Fair Price of LFG when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: Insufficient data to calculate LFG's fair value for valuation analysis.
Significantly Below Fair Value: Insufficient data to calculate LFG's fair value for valuation analysis.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.
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How is Archaea Energy forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?
Future Growth Score5/6
Future Growth Score 5/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: LFG is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.9%).
Earnings vs Market: LFG is forecast to become profitable over the next 3 years, which is considered above average market growth.
High Growth Earnings: LFG is expected to become profitable in the next 3 years.
Revenue vs Market: LFG's revenue (41.8% per year) is forecast to grow faster than the US market (7.6% per year).
High Growth Revenue: LFG's revenue (41.8% per year) is forecast to grow faster than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: Insufficient data to determine if LFG's Return on Equity is forecast to be high in 3 years time
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How has Archaea Energy performed over the past 5 years?
Past Performance Score0/6
Past Performance Score 0/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: LFG is currently unprofitable.
Growing Profit Margin: LFG is currently unprofitable.
Past Earnings Growth Analysis
Earnings Trend: LFG is unprofitable, and losses have increased over the past 5 years at a rate of 62.6% per year.
Accelerating Growth: Unable to compare LFG's earnings growth over the past year to its 5-year average as it is currently unprofitable
Earnings vs Industry: LFG is unprofitable, making it difficult to compare its past year earnings growth to the Oil and Gas industry (184.6%).
Return on Equity
High ROE: LFG has a negative Return on Equity (-2.5%), as it is currently unprofitable.
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How is Archaea Energy's financial position?
Financial Health Score3/6
Financial Health Score 3/6
Short Term Liabilities
Long Term Liabilities
Stable Cash Runway
Forecast Cash Runway
Financial Position Analysis
Short Term Liabilities: LFG's short term assets ($310.0M) exceed its short term liabilities ($124.4M).
Long Term Liabilities: LFG's short term assets ($310.0M) do not cover its long term liabilities ($748.2M).
Debt to Equity History and Analysis
Debt Level: LFG's net debt to equity ratio (42.3%) is considered high.
Reducing Debt: Insufficient data to determine if LFG's debt to equity ratio has reduced over the past 5 years.
Cash Runway Analysis
For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.
Stable Cash Runway: LFG has sufficient cash runway for more than a year based on its current free cash flow.
Forecast Cash Runway: LFG has sufficient cash runway for 2.1 years if free cash flow continues to reduce at historical rates of 63.6% each year.
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What is Archaea Energy current dividend yield, its reliability and sustainability?
Dividend Score 0/6
Cash Flow Coverage
Dividend Yield vs Market
|Archaea Energy Dividend Yield vs Market|
|Company (Archaea Energy)||n/a|
|Market Bottom 25% (US)||1.7%|
|Market Top 25% (US)||4.7%|
|Industry Average (Oil and Gas)||5.2%|
|Analyst forecast in 3 Years (Archaea Energy)||0%|
Notable Dividend: Unable to evaluate LFG's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.
High Dividend: Unable to evaluate LFG's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.
Stability and Growth of Payments
Stable Dividend: Insufficient data to determine if LFG's dividends per share have been stable in the past.
Growing Dividend: Insufficient data to determine if LFG's dividend payments have been increasing.
Earnings Payout to Shareholders
Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: Unable to calculate sustainability of dividends as LFG has not reported any payouts.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Nick Stork (38 yo)
Mr. Nicholas Stork, also known as Nick, was the Co-Founder, Chief Executive Officer and a Director of Legacy Archaea from its founding in November 2018 until combination with RAC and Aria in September 2021...
CEO Compensation Analysis
|Nick Stork's Compensation vs Archaea Energy Earnings|
|Date||Total Comp.||Salary||Company Earnings|
|Jun 30 2022||n/a||n/a|
|Mar 31 2022||n/a||n/a|
|Dec 31 2021||US$3m||n/a|
|Sep 30 2021||n/a||n/a|
|Jun 30 2021||n/a||n/a|
|Mar 31 2021||n/a||n/a|
|Dec 31 2020||US$100k||US$100k|
Compensation vs Market: Nick's total compensation ($USD2.85M) is below average for companies of similar size in the US market ($USD5.63M).
Compensation vs Earnings: Nick's compensation has increased whilst the company is unprofitable.
Experienced Management: LFG's management team is not considered experienced ( 1 years average tenure), which suggests a new team.
Experienced Board: LFG's board of directors are not considered experienced ( 1 years average tenure), which suggests a new board.
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.
|Owner Type||Number of Shares||Ownership Percentage|
Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 4%.
|Ownership||Name||Shares||Current Value||Change %||Portfolio %|
Archaea Energy Inc.'s employee growth, exchange listings and data sources
- Name: Archaea Energy Inc.
- Ticker: LFG
- Exchange: NYSE
- Founded: 2018
- Industry: Oil and Gas Refining and Marketing
- Sector: Energy
- Implied Market Cap: US$2.160b
- Market Cap: US$1.482b
- Shares outstanding: 119.78m
- Website: https://www.archaeaenergy.com
Number of Employees
- Archaea Energy Inc.
- 4444 Westheimer Road
- Suite G450
- United States
|Ticker||Exchange||Primary Security||Security Type||Country||Currency||Listed on|
|LFG||NYSE (New York Stock Exchange)||Yes||Class A Common Stock||US||USD||Dec 2020|
|RIQ0||DB (Deutsche Boerse AG)||Yes||Class A Common Stock||DE||EUR||Dec 2020|
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/09/27 00:00|
|End of Day Share Price||2022/09/27 00:00|
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.