Analysts Expect Golar LNG Limited (NASDAQ:GLNG) To Breakeven Soon

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Golar LNG Limited (NASDAQ:GLNG) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Golar LNG Limited provides infrastructure for the liquefaction, transportation, and regasification of LNG. On 31 December 2020, the US$1.3b market-cap company posted a loss of US$274m for its most recent financial year. Many investors are wondering about the rate at which Golar LNG will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Golar LNG

Golar LNG is bordering on breakeven, according to the 7 American Oil and Gas analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$39m in 2021. So, the company is predicted to breakeven approximately a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 124%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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Underlying developments driving Golar LNG's growth isn’t the focus of this broad overview, though, keep in mind that generally energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we would like to bring into light with Golar LNG is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Golar LNG's case is 53%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Golar LNG, so if you are interested in understanding the company at a deeper level, take a look at Golar LNG's company page on Simply Wall St. We've also compiled a list of key factors you should further examine:

  1. Valuation: What is Golar LNG worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Golar LNG is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Golar LNG’s board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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