Why Golar LNG Limited (GLNG) Is Popping on Friday

NEW YORK (TheStreet) -- Golar LNG Limited (GLNG) is popping on Friday after posting better-than-expected profits in its preliminary report of the December-ended quarter.

By early afternoon, shares had added 6.1% to $35.83.

The Bermuda-based gas shipper reported quarterly net income of $4.3 million. Analysts surveyed by Thomson Reuters had forecast a net loss of $5.05 million.

Revenue of $17.31 million came in higher than consensus of $12.75 million.

The board maintained its dividend of 45 cents a share.

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TheStreet Ratings team rates GOLAR LNG LTD as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate GOLAR LNG LTD (GLNG) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • GLNG's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GOLAR LNG LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • GLNG, with its very weak revenue results, has greatly underperformed against the industry average of 3.3%. Since the same quarter one year prior, revenues plummeted by 85.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • GOLAR LNG LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, GOLAR LNG LTD increased its bottom line by earning $11.66 versus $0.61 in the prior year. For the next year, the market is expecting a contraction of 96.6% in earnings ($0.40 versus $11.66).
  • The share price of GOLAR LNG LTD has not done very well: it is down 7.51% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.

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How Will Golar (GLNG) Stock React to Wednesday's Q2 Results?