Golar LNG (GLNG) Is the 'Chart of the Day'

NEW YORK (TheStreet) -- Shares of Golar LNG (GLNG) were gaining 0.4% to $46 Thursday, days after the shipping company announced that it started negotiations for a third GoFLNG vessel.

About 586,000 shares of Golar LNG were traded by 12:03 p.m. Thursday, compared to the company's average trading volume of about 1.7 million shares a day.

On Tuesday Golar LNG announced that it commenced negotiations with partners Keppel and Black & Veatch to exercise an option under its existing agreement to order the third GoFLNG vessel. The new vessel would be similar to the company's Hilli and Gimi vessels.

The company hopes to mature the option of the agreement and have its partners deliver the vessel for start-up in 2018. The company's first two units are targeted for 2017 and 2019 delivery for Cameroon and Equatorial Guinea, respectively.

Golar LNG said it does not see third GoFLNG option requiring the issuance of new equity.

Insight from TheStreet's Research Team:

Bryan Ashenberg and Bob Lang, Trfiecta Stocks Portfolio Co-Managers, have identified Golar LNG as the "Chart of the Day." Here's what they had to say about the stock's chart:

Golar LNG is involved in the very hot natural gas segment -- transporting, liquefying and trading the commodity. The names in this group had come under pressure with the drop in crude and the big rise in the dollar (which generally is negative for commodities).

Tuesday, the stock bolted higher on some very extreme volume, about 8x the average turnover. The upward channel was broken to the upside.

GLNG raced up and closed on the lows of the day but is still above the upper Bollinger band, and Wednesday, it followed through. We have a potential "fat tail" trade opportunity to work with here.

Relative Strength is impressive as money flows into the name. A higher high on the chart would cinch the stock for higher prices.

DISCLOSURE: Trifecta Stocks has no position in GLNG. This Alert is a technical analysis of the company's chart, and we are not taking any action in the stock at this time.

-Bryan Ashenberg and Bob Lang, "Chart of the Day: GLNG," originally published 5/7/15 on TrifectaStocks.com

Separately, TheStreet Ratings team rates GOLAR LNG LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOLAR LNG LTD (GLNG) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."

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

  • GLNG's very impressive revenue growth greatly exceeded the industry average of 33.1%. Since the same quarter one year prior, revenues leaped by 78.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.60, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 981.4% when compared to the same quarter one year ago, falling from $4.31 million to -$38.00 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GOLAR LNG LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: GLNG Ratings Report
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