A month has gone by since the last earnings report for Golar LNG (GLNG - Free Report) . Shares have added about 15.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Golar LNG Posts Q2 Loss, Revenues Miss
Golar LNG incurred a loss (excluding 49 cents from non-recurring items) of 62 cents per share in second-quarter 2019, wider than the Zacks Consensus Estimate of a loss of 34 cents. Moreover, the amount of loss increased year over year. Results were affected by seasonal weakness in the shipping market as well as drydockings.
The company intends to simplify its capital structure by repurchasing 3 million shares underlying the Total Return Swap (TRS). In order to fund the TRS buyback, the company has decided to suspend dividends for two quarters.
Total operating revenues amounted to $82.3 million, falling short of the Zacks Consensus Estimate of $85.1 million. However, the top line surged year over year.
Of the total revenues, Liquefaction services revenues accounted for the bulk (56.4%) of the company’s top line. On a sequential comparison, Time and voyage charter revenues plunged 31.7%. Time charter revenues — collaborative arrangement — also dropped 63.7% compared with the first quarter of 2019. Revenues from Vessel and other management fees too fell 5.7% sequentially. Further, Time Charter Equivalent (TCE) earnings decreased to $24,400 per day in the quarter under discussion compared with $39,300 in first-quarter 2019. This downside was due to seasonal sluggishness and idle time associated with dry dockings.
The company reported operating loss of $23.44 million in the second quarter compared with $28.86 million in the previous reported quarter. Total operating expenses decreased 24.4% sequentially in the quarter to $94.75 million. Also, Vessel operating expenses dipped 1.4% from the first quarter to $30.82 million in the second, mainly owing to reduced costs associated with the company’s Golar Viking LNG carrier.
The company exited the second quarter with cash and cash equivalents of $139.83 million compared with $217.83 million at December 2018 end. As of Jun 30, 2019, its long-term debt totaled $1.67 billion compared with $1.83 billion as of Dec 31, 2018.
Golar LNG had earlier decided on a spin-off of its Trifuel Diesel Electric ("TFDE") LNG carrier business to focus primarily on FLNG and its downstream assets. The company hopes to complete this spin-off by the year-end, subject to market conditions.
The company anticipates earnings to improve going forward owing to a likely shortage of shipping (in the remainder of 2019 as well as in 2020), seasonally higher rates and additional trading days. However, low LNG prices could be a drag on its growth prospects. Meanwhile, the company’s Sergipe project is on track to commence operations in January next year.
How Have Estimates Been Moving Since Then?
Estimates revision followed a flat path over the past two months. The consensus estimate has shifted -55.89% due to these changes.
At this time, Golar LNG has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.
Golar LNG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.