• If you are wondering whether FLEX LNG's current share price still offers value, the recent share performance gives you a lot to think about.
• The stock last closed at US$30.47, with returns of 0.9% over 7 days, 4.1% over 30 days, 23.5% year to date and 58.8% over the past year. These figures put recent moves firmly on your radar when you think about risk and reward.
• Recent news flow around FLEX LNG has focused on its role in the liquefied natural gas shipping space and how investors are reacting to broader sector headlines. Together, these updates help frame whether current sentiment supports the share price or leaves room for repricing.
• FLEX LNG currently has a valuation score of 3/6. This sets the scene for comparing different valuation methods next and, later in the article, looking at an even richer way to think about what the stock might be worth.

Approach 1: FLEX LNG Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and then discounting them back to today’s value.

For FLEX LNG, the latest twelve month Free Cash Flow is reported at about $140.7 million. Using a 2 Stage Free Cash Flow to Equity model, cash flows are projected out over the next decade, with analyst inputs for earlier years and further projections extrapolated by Simply Wall St. By 2035, the model uses an estimated Free Cash Flow of $369.3 million, with each year’s cash flow discounted back to reflect risk and the time value of money.

Adding these discounted cash flows together produces an estimated intrinsic value of US$108.73 per share. Compared with the recent share price of US$30.47, this particular DCF output suggests FLEX LNG is trading at a 72.0% discount to that modeled value. This indicates a wide gap between the current market price and this cash flow based estimate.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests FLEX LNG is undervalued by 72.0%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.

Approach 2: FLEX LNG Price vs Earnings

For a profitable company like FLEX LNG, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. Investors usually accept a higher or lower P/E depending on what they expect for future earnings growth and how much risk they see in those earnings.

FLEX LNG currently trades on a P/E of 22.0x. That sits above both the Oil and Gas industry average P/E of 15.6x and the peer group average of 13.9x. This indicates that the market is putting a higher earnings multiple on FLEX LNG than on many of its sector peers.

Simply Wall St’s Fair Ratio for FLEX LNG is 22.5x. This is a proprietary estimate of what a “normal” P/E could look like for the company, given factors such as its earnings growth profile, profit margins, industry, market cap and risk characteristics. Because it adjusts for these features, the Fair Ratio can be a more tailored benchmark than a simple comparison with peers or the broad industry.

With the current P/E at 22.0x and the Fair Ratio at 22.5x, FLEX LNG’s valuation on earnings appears close to what the model suggests.

Result: ABOUT RIGHT

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.

Upgrade Your Decision Making: Choose your FLEX LNG Narrative

Earlier it was mentioned that there is an even better way to think about valuation, and on Simply Wall St this comes through Narratives. On the Community page, you and other investors connect a clear story about FLEX LNG, your assumptions for future revenue, earnings and margins, and a resulting fair value that is then compared with the current share price to help decide whether the stock looks attractive or expensive. This updates automatically when new information such as news or earnings is added, and can differ widely. For example, one investor might use the analyst consensus fair value of about US$26.13 and see the stock as fully priced, while another might focus on the company’s long contract backlog and use higher long term margin assumptions to support a meaningfully higher fair value.

Do you think there's more to the story for FLEX LNG? Head over to our Community to see what others are saying!

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.