New Fortress Energy Introduces 3 New Risk Factors in Q2 Earnings Report

New Fortress Energy (NFE) is a liquefied natural gas company focused on accelerating the global shift to clean energy. The company recently signed multi-year agreements with Unigel to supply natural gas to fertilizer plants in Brazil.

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Let’s take a look at New Fortress Energy’s latest financial performance and risk factors.

New Fortress Energy’s Q2 Financial Results

Revenue of $223.84 million increased from $94.57 million a year ago but missed consensus expectations of $340.09 million. Additionally, a loss per share of $0.03 improved from the loss per share of $2.40 reported a year ago but missed the consensus-estimated earnings per share of $0.16.

The company ended the quarter with $230.32 million in cash. Notably, it plans to pay a dividend of $0.10 per share on September 17. (See New Fortress Energy stock charts on TipRanks).

After reporting its Q2 results, New Fortress Energy announced a five-year deal to supply Unigel’s fertilizer plants in Brazil with liquefied natural gas. That contract is expected to begin in the first quarter of 2022, and New Fortress Energy says that it could generate additional business from Unigel going forward.

New Fortress Energy’s Risk Factors

The new TipRanks Risk Factors tool shows 120 risk factors for New Fortress Energy. Since June 2021, the company has amended its risk profile to introduce three new risk factors.

A newly added risk under the Finance and Corporate category relates to the Fast LNG technology developed by the company with the aim of making liquefied natural gas delivery faster and cheaper than traditional systems. The company is in the process of setting up its first delivery system based on this technology. However, it warns investors that it may not achieve the benefits expected and that failure could adversely impact its future projects.

Under the Production category, a new risk factor cautions investors about potential disruptions to the company’s operations due to labor disputes. Notably, the company states that all its staff in Brazil have labor union representation. Therefore, subject to strikes and higher labor costs in the future, the company might record reduced profits.

Finance and Corporate is New Fortress Energy’s largest risk category, representing 35% of the total risks. That’s below the sector average at 39%. New Fortress Energy’s shares have declined 46% since the beginning of 2021.

Analysts’ Take

Following New Fortress Energy’s Q2 report, Stifel Nicolaus analyst Benjamin Nolan reiterated a Buy rating on NFE stock but lowered the price target to $45 from $53. Nolan’s new price target suggests 55.49% upside potential.

Nolan commented, “There has been growth at NFE, but it unquestionably has been much slower in materializing than had been forecasted. While the same dynamic may be true going forward given management’s expectations for operating income to nearly double next year, we do believe there is great growth potential in the next three years. We are particularly encouraged by the Brazilian market which NFE acquired through the Hygo purchase several months ago.”

Consensus among analysts is a Moderate Buy based on 4 Buys and 2 Holds. The average New Fortress Energy price target of $51.33 implies 77.37% upside potential to current levels.