Golar LNG (GLNG) drew fresh attention after closing a new $600 million senior secured revolving credit facility. The debt deal is tied to its MKII FLNG vessel and a 20-year contract in Argentina.

The new facility comes after a period where Golar LNG’s share price return has been mixed in the short term, with the 90 day share price return down 9.57%, yet the year to date share price return at 30.25% and the 5 year total shareholder return at 406.82% indicating stronger performance over a longer horizon.

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After the new credit facility and a share price that has surged over longer horizons yet eased in the last quarter, the real tension around Golar LNG is simple: Does it make more sense to commit capital now or wait for a cheaper entry and a different risk reward trade off in the valuation section that follows?

Most Popular Narrative: 18.0% Undervalued

Against Golar LNG's last close at $49.43, the most followed narrative anchors a fair value at $60.28 using a 7.11% discount rate. That gap sets clear expectations for what needs to go right in the underlying FLNG story.

The company has secured long-term (20-year) charters for its existing FLNG units, providing $17 billion in contracted EBITDA backlog and 20 years of cash flow visibility, which is expected to drive a significant (4x) increase in EBITDA and contracted free cash flow by 2028, indicating the market may be undervaluing its forward earnings stability and revenue growth.

Want to see what sits behind that claim of long term visibility for Golar LNG? The key ingredients are sustained double digit revenue growth, rising margins and a rich earnings multiple applied years out. Curious how those moving parts combine into a single fair value number and what would need to change for that to break? The full narrative lays out the blueprint in detail.

Result: Fair Value of $60.28 (UNDERVALUED)

However, the Golar LNG narrative can quickly change if LNG demand softens or if new FLNG capacity leads to weaker charter rates and lower vessel utilization.

Another View on Golar LNG’s Valuation

The earlier narrative leans on future earnings to argue Golar LNG is 18.0% undervalued at $49.43 versus a $60.28 fair value. On a simple P/E of 35.7x, however, the stock looks expensive versus the US Oil and Gas industry at 13.8x and slightly above peers at 35.4x.

The fair ratio for Golar LNG is 38.2x, which is higher than today’s 35.7x. That suggests the market could still move toward a richer multiple if earnings unfold as expected, but it also leaves less room for error. Which story do you think the market will believe?

Next Steps

Given the mix of optimism and concern around Golar LNG, it makes sense to move quickly and review the data on your own terms. To see a balanced snapshot of what other investors view as the main positives and key weak spots, start with these 4 key rewards and 2 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.