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Here's Why Investors Should Give Golar LNG Stock a Miss Now
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Golar LNG’s (GLNG - Free Report) financial stability is challenged by inflationary pressure pushing up the operating expenses. Elevated vessel operating expenses are further putting a strain on the company’s bottom line, making it an unattractive choice for investors’ portfolios.
Let’s delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 34.6% downward in the past 90 days. For the current year, the consensus mark for earnings has moved 31.3% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: GLNG currently carries a Zacks Rank #4 (Sell).
Unimpressive Price Performance: Golar LNG’s shares have lost 0.1% in the past 30 days compared with its industry’s 0.9% decline.
Image Source: Zacks Investment Research
Bearish Industry Rank: The industry to which GLNG belongs currently has a Zacks Industry Rank of 143 (out of 251). Such an unfavorable rank places it in the bottom 43% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
High Costs Represent a Major Headwind: The northward movement in operating expenses is hurting Golar LNG’sbottom line, challenging its financial stability. The surge in operating expenses was primarily caused by inflationary pressure. In the second quarter of 2024, total operating expenses rose 17% compared with the previous quarter’s actuals.
Vessel operating expenses, accounting for 55.7% of the total operating expenses, rose 21% quarter over quarter.
Golar's expansion plans are burdened by high capital expenditures, with each FLNG unit costing around $600 million. This heavy spending strains its balance sheet, increasing reliance on debt and exposing the company to liquidity risks and market fluctuations, potentially hurting the company’s bottom line.
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 18.6% in the past year.
WAB carries a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 26% for the current year.
The company has a discouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters. The average beat is 11.8%. Shares of WAB have climbed 51.8% in the past year.
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Here's Why Investors Should Give Golar LNG Stock a Miss Now
Golar LNG’s (GLNG - Free Report) financial stability is challenged by inflationary pressure pushing up the operating expenses. Elevated vessel operating expenses are further putting a strain on the company’s bottom line, making it an unattractive choice for investors’ portfolios.
Let’s delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 34.6% downward in the past 90 days. For the current year, the consensus mark for earnings has moved 31.3% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: GLNG currently carries a Zacks Rank #4 (Sell).
Unimpressive Price Performance: Golar LNG’s shares have lost 0.1% in the past 30 days compared with its industry’s 0.9% decline.
Image Source: Zacks Investment Research
Bearish Industry Rank: The industry to which GLNG belongs currently has a Zacks Industry Rank of 143 (out of 251). Such an unfavorable rank places it in the bottom 43% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
High Costs Represent a Major Headwind: The northward movement in operating expenses is hurting Golar LNG’sbottom line, challenging its financial stability. The surge in operating expenses was primarily caused by inflationary pressure. In the second quarter of 2024, total operating expenses rose 17% compared with the previous quarter’s actuals.
Vessel operating expenses, accounting for 55.7% of the total operating expenses, rose 21% quarter over quarter.
Golar's expansion plans are burdened by high capital expenditures, with each FLNG unit costing around $600 million. This heavy spending strains its balance sheet, increasing reliance on debt and exposing the company to liquidity risks and market fluctuations, potentially hurting the company’s bottom line.
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
C.H. Robinson Worldwide currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. CHRW has an expected earnings growth rate of 25.2% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 18.6% in the past year.
WAB carries a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 26% for the current year.
The company has a discouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters. The average beat is 11.8%. Shares of WAB have climbed 51.8% in the past year.