Middle East tensions put Golar LNG (GLNG) in focus

A missile attack on a major Qatari natural gas hub, a key supplier of global LNG, has pushed investors toward LNG exposed names such as Golar LNG (GLNG), amid concerns around potential supply disruptions.

The news-driven spike in LNG prices has been reflected in Golar LNG’s share price, with a 1-day share price return of 3.36%, a 7-day return of 17.41%, and a 90-day return of 41.36%. Total shareholder return over 5 years is more than 5x, suggesting that momentum has recently strengthened on shifting risk perceptions around supply security.

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With Golar LNG trading around US$52.67, roughly in line with the current analyst price target yet showing a large intrinsic value gap on some models, you have to ask: is there still a genuine opportunity here, or is the market already pricing in future growth?

Most Popular Narrative: 1.2% Overvalued

The narrative fair value of $52.06 sits slightly below the last close at $52.67, so you are looking at a very tight valuation gap.

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 underpins that cash flow claim? The narrative leans on aggressive earnings expansion, richer margins, and a premium profit multiple to back into that fair value.

Result: Fair Value of $52.06 (OVERVALUED)

However, that story can quickly change if LNG demand softens faster than expected, or if new FLNG capacity creates overcapacity and pressures charter rates and margins.

Another Angle: Big Discount on Cash Flows

While the narrative model says Golar LNG looks about 1.2% overvalued at $52.67 versus a $52.06 fair value, the SWS DCF model points the other way, with a future cash flow value of $99.21 per share, or about 47% above the current price. So which story do you trust more: the cash flows or the narrative assumptions?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Golar LNG for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 54 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Given the mix of optimism and concern in this story, it makes sense to check the numbers yourself and decide quickly where you stand by reviewing the 3 key rewards and 2 important warning signs.

Looking for more investment ideas?

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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.