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Why Is Golar LNG (GLNG) Up 11.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Golar LNG (GLNG - Free Report) . Shares have added about 11.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Golar LNG due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Golar LNG's Q2 Loss Wider, Revenues Miss

Golar LNG incurred wider-than-expected loss (excluding 74 cents from non-recurring items) of 38 cents in the second quarter of 2018. The Zacks Consensus Estimate for the same stood at 19 cents. However, the amount of loss narrowed significantly from 51 cents a year ago.

Total operating revenues of $59.4 million also missed the Zacks Consensus Estimate of $63.2 million. However, the top line surged more than 100% year over year. Of the total revenues, Time and voyage charter revenues accounted for the bulk (51.9%), grossing $30.80 million (up 57.5% year over year). While Time charter revenues-collaborative arrangement were $4.87 million (up 10.6%), Vessel and other management fees were $5.13 million (up 15.3%). Meanwhile, Liquefaction services revenues were $18.58 million.

As was expected, seasonal softening of the shipping market caused a reduction of $16,400 in daily TCE (Time Charter Equivalent) earnings to $19,600 during the second quarter from $36,000 in the first. However, with improvement in the shipping market, third-quarter TCE is expected to at least double the second-quarter figure.

Total operating expenses soared 50.3% in the quarter under discussion to $78.73 million. Vessel operating expenses escalated 69.4% year over year to $20.5 million, primarily due to rise in FLNG operating costs with the onset of Hilli Episeyo's operation. Moreover, on commencement, Hilli Episeyo’s value depreciated and thus depreciation and amortization expenses climbed 17.8% year over year to $20.46 million.


 

Liquidity

At the end of the second quarter, the company had cash and cash equivalents of $375.07 million compared with $214.86 million at December 2017 end. As of Jun 30, 2018, the company’s long-term debt totaled $1.85 billion compared with $1.02 billion as of Dec 31, 2017.

Q3 Outlook

Third-quarter results are anticipated to get a boost from the operation of Hilli Episeyo and an improving shipping market.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -198.01% due to these changes.

VGM Scores

Currently, Golar LNG has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Golar LNG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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