Flex LNG Ltd’s (OB:FLNG): FLEX LNG Ltd., through its subsidiaries, engages in the transportation of liquefied natural gas and related activities in the British Virgin Islands. On 31 December 2017, the ØRE4.05B market-cap posted a loss of -US$10.41M for its most recent financial year. As path to profitability is the topic on FLNG’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for FLNG, its year of breakeven and its implied growth rate.
Check out our latest analysis for Flex LNG
Expectation from analysts is FLNG is on the verge of breakeven. They anticipate the company to incur a final loss in 2017, before generating positive profits of US$15.92M in 2018. So, FLNG is predicted to breakeven approximately a few months from now. In order to meet this breakeven date, I calculated the rate at which FLNG must grow year-on-year. It turns out an average annual growth rate of 81.79% is expected, which is rather optimistic! If this rate turns out to be too aggressive, FLNG may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for FLNG given that this is a high-level summary, though, keep in mind that by and large oil and gas companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that FLNG has managed its capital prudently, with debt making up 30.76% of equity. This means that FLNG has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of FLNG which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at FLNG, take a look at FLNG’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should look at:
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Valuation: What is FLNG 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 FLNG is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Flex LNG’s board and the CEO’s back ground.
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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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.