Golar LNG Limited (GLNG) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Golar LNG (GLNG)? Shares have been on the move with the stock up 31% over the past month. The stock hit a new 52-week high of $30.66 in the previous session. Golar LNG has gained 141.7% since the start of the year compared to the -8% move for the Zacks Transportation sector and the 35.1% return for the Zacks Transportation - Shipping industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 11, 2022, Golar LNG reported EPS of $0.4 versus consensus estimate of $0.26 while it missed the consensus revenue estimate by 25.89%.
For the current fiscal year, Golar LNG is expected to post earnings of $0.94 per share on $350.98 million in revenues. This represents a -43.03% change in EPS on a -20.47% change in revenues. For the next fiscal year, the company is expected to earn $1.36 per share on $273.16 million in revenues. This represents a year-over-year change of 45.03% and -22.17%, respectively.
Valuation Metrics
Golar LNG may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Golar LNG has a Value Score of C. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 31.9X current fiscal year EPS estimates, which is a premium to the peer industry average of 3.5X. On a trailing cash flow basis, the stock currently trades at 11.3X versus its peer group's average of 3X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Golar LNG currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Golar LNG fits the bill. Thus, it seems as though Golar LNG shares could have potential in the weeks and months to come.
How Does GLNG Stack Up to the Competition?
Shares of GLNG have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Ardmore Shipping Corporation (ASC). ASC has a Zacks Rank of # 1 (Strong Buy) and a Value Score of C, a Growth Score of B, and a Momentum Score of B.
Earnings were strong last quarter. Ardmore Shipping Corporation beat our consensus estimate by 2.53%, and for the current fiscal year, ASC is expected to post earnings of $2.42 per share on revenue of $235.88 million.
Shares of Ardmore Shipping Corporation have gained 16.4% over the past month, and currently trade at a forward P/E of 4.02X and a P/CF of 115.21X.
The Transportation - Shipping industry is in the top 16% of all the industries we have in our universe, so it looks like there are some nice tailwinds for GLNG and ASC, even beyond their own solid fundamental situation.
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