Golar LNG (GLNG) stock’s performance has caught the attention of investors lately, especially as the company continues to evolve its role in the energy sector. With recent price action and industry developments, many are watching for signs of new catalysts that could influence future returns.

This year’s share price action for Golar LNG has been relatively subdued, but the bigger picture remains impressive. While the stock is down year-to-date, a 2.8% total shareholder return over the past 12 months and substantial gains of 77% and 423% over the last three and five years point to underlying momentum and a history of value creation for patient investors.

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With impressive long-term returns but a lukewarm stretch this year, the question is whether Golar LNG’s current valuation leaves room for further upside or if the market is already factoring in all the expected growth.

Most Popular Narrative: 23.7% Undervalued

Compared to Golar LNG’s last close at $38.99, the most widely followed narrative pegs fair value much higher. This reflects optimism about long-term cash flow certainty and future profitability.

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. This 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.

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Result: Fair Value of $51.10 (UNDERVALUED)

However, heavy reliance on global LNG demand and execution risks around uncontracted FLNG expansion could present challenges to Golar's impressive profit growth narrative.

Another View: Caution From the Multiples

While analysts see upside based on future earnings, Golar LNG’s current price-to-sales ratio sits at 14.8x, far higher than both industry (1.5x) and peer averages (2x), and well above its fair ratio of 1.8x. This steep premium suggests the market is pricing in a lot of optimism already. Could this leave little room for error if growth expectations fall short?

Build Your Own Golar LNG Narrative

If you see things differently or want to dig into the financials yourself, creating your personalized view takes just a few minutes. Do it your way.

A great starting point for your Golar LNG research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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.