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Golar LNG (GLNG) Up 19.8% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Golar LNG (GLNG - Free Report) . Shares have added about 19.8% 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 Posts Q2 Loss, Revenues Beat

Golar LNG Limited incurred a loss (excluding $1.51 from non-recurring items) of 8 cents per share in second-quarter 2020, narrower than the Zacks Consensus Estimate of a loss of 10 cents. Moreover, the amount of loss declined year over year. Low costs aided the bottom line.

Adjusted revenues of $100.7 million surpassed the Zacks Consensus Estimate of $90.3 million. Total operating revenues came in at $102.24 million. The top line also increased year over year, backed by an impressive performance at FLNG and a strong shipping business. Notably, FLNG Hilli Episeyo maintained its 100% commercial uptime in the quarter under review.

FLNG revenues accounted for bulk (53.3%) of the company’s top line. Revenues from vessel and other operations reflected the balance. Notably, Time and voyage charter revenues plunged 32.4% sequentially. Additionally, Time Charter Equivalent (“TCE”) earnings declined to $45,100 per day in the quarter under discussion, compared with $61,900 in first-quarter 2020. Golar LNG anticipates TCE earnings to be around $35,000 per day with utilization of approximately 78% in third-quarter 2020.

Vessel-operating expenses of $24.24 million decreased 19.8% sequentially. This was due to reduction in expenses associated with repairs and maintenance, procurement of spares and logistics among other things due to coronavirus-related movement restrictions. However, the company expects vessel-operating expenses to increase in the second half of 2020 as restrictions are lifted and normal business work is resumed.

Total administrative expenses dropped 15.3% from first-quarter 2020 to $8.6 million due to cost-reduction efforts such as lower payroll and travel costs.  Project-development expenses fell 66.2% sequentially to $1.25 million.

The company exited the second quarter with a cash balance of $265.2 million, of which $128.7 million was unrestricted cash. As of Jun 30, 2020, its total debt (current and non-current) was $2.54 billion.

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 -243.54% due to these changes.

VGM Scores

At this time, Golar LNG has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. 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 these revisions 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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