Goldman Sachs endorsement puts Golar LNG in focus

Goldman Sachs recently added Golar LNG (GLNG) to its US Conviction List, citing expectations for the company’s contracted EBITDA to triple by 2028 as new liquefaction capacity comes online.

This endorsement from a major investment bank draws attention to Golar LNG’s role in floating LNG infrastructure. It also raises fresh questions for investors around contract visibility, future cash generation, and how today’s share price reflects those expectations.

Golar LNG’s share price has had a modest 6.96% year to date return, with a 6.96% 1 month share price return and a slightly negative 1 day move. Its 3 year total shareholder return of 95.50% and 5 year total shareholder return of 279.70% point to a strong longer term record, suggesting sentiment has been rebuilding recently as investors react to the Goldman Sachs conviction call and the company’s liquefaction growth plans.

If this kind of LNG story has caught your attention, it could be a good moment to see what is happening across aerospace and defense stocks that are reshaping energy and security supply chains.

With Goldman’s conviction call, a US$40.59 share price, and a roughly 27% gap to the US$51.44 analyst target, you have to ask: is Golar LNG still underappreciated, or is the market already baking in most of the growth story?

Most Popular Narrative: 20.6% Undervalued

At $40.59, the most followed narrative implies upside to a fair value of $51.10, anchored on long-dated FLNG contracts and projected cash flows discounted at 7.0%.

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 earnings path and profit margins sit behind that backlog story, and how they feed into a higher future earnings multiple and fair value?

Result: Fair Value of $51.10 (UNDERVALUED)

However, that story can unravel quickly if FLNG contract execution slips or LNG demand softens, which could challenge both backlog assumptions and earnings expectations.

Another way to look at Golar LNG’s value

That 20.6% undervaluation story based on long term contracts meets a very different message when you look at the current P/E. Golar LNG trades on 69.5x earnings, compared with a fair ratio of 19.7x, the US Oil and Gas average of 13.7x, and a 31.1x peer average. This comparison points to meaningful valuation risk if sentiment cools.

Build Your Own Golar LNG Narrative

If you see the story differently or just prefer running the numbers yourself, you can shape your own view in a few minutes: Do it your way.

A great starting point for your Golar LNG research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If Golar LNG has you thinking about what else might be on your radar, this is the moment to broaden your watchlist and pressure test your next move.

• Spot potential mispricings early by checking out these 890 undervalued stocks based on cash flows that could offer a more attractive entry point than the broader market.
• Get ahead of major shifts in technology by scanning these 24 AI penny stocks that link artificial intelligence to real business models and financials.
• Add income ideas to your shortlist with these 12 dividend stocks with yields > 3% that focus on yields above 3% while still keeping fundamentals in view.

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.