FLEX LNG (FLNG) AI Stock Analysis

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FLEX LNG

(NYSE:FLNG)

72Outperform

FLEX LNG's overall score reflects its solid financial performance and attractive valuation, bolstered by a strong earnings call. However, technical indicators suggest caution due to potential overbought conditions, and ongoing market and regulatory challenges could impact future performance.

Positive Factors

Dividend Strength

FLNG's high contract coverage provides strong cash flow visibility which should continue to fund the dividend.

Earnings Performance

Flex LNG reported an overall 2Q beat, as the termination of the back end of an interest rate swap pushed earnings above expectations.

Financial Stability

Flex declared its usual dividend of $0.75/sh and announced it had received credit approval for the refinancing of 3 ships for $430 million, unlocking $97 million in cash.

Negative Factors

Market Conditions

EU gas inventories are currently sitting at all-time highs for this point in the year at ~95% full, creating an additional overhang for LNG carrier rates.

Spot Rate Pressure

Limited spot cargoes across both Atlantic and Pacific basins is putting downward pressure on spot rates.

FLEX LNG (FLNG) vs. S&P 500 (SPY)

Market Cap

$1.21B

Dividend Yield13.19%

Average Volume (3M)469.75K

Price to Earnings (P/E)10.4

Beta (1Y)0.41

Revenue Growth-3.95%

EPS Growth-2.25%

CountryUS

Employees9

SectorEnergy

Sector Strength52

IndustryOil & Gas Midstream

Share Statistics

EPS (TTM)2.18

Shares Outstanding54,087,770

10 Day Avg. Volume565,074

30 Day Avg. Volume469,748

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)3.40

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$25.00

Price Target Upside8.46% Upside

Rating ConsensusHold

Number of Analyst Covering2

FLEX LNG Business Overview & Revenue Model

Company DescriptionFlex LNG Ltd., through its subsidiaries, engages in the seaborne transportation of liquefied natural gas (LNG) worldwide. As of February 16, 2022, it owned and operated nine M-type electronically controlled gas injection LNG carriers; and four vessels with generation X dual fuel propulsion systems. It also provides chartering and management services. Flex LNG Ltd. was incorporated in 2006 and is based in Hamilton, Bermuda.

How the Company Makes MoneyFLEX LNG makes money primarily through long-term time charter agreements with energy companies and traders who require transportation of LNG. These contracts provide a steady stream of revenue, as customers pay a fixed daily rate to use FLEX LNG's vessels over an agreed period. The company also engages in spot market charters, which offer higher rates when demand for LNG shipping capacity spikes. Additionally, the company's earnings are influenced by partnerships with major energy producers and traders who depend on FLEX LNG's modern fleet for efficient and reliable LNG transport.

FLEX LNG Financial Statement Overview

Summary

FLEX LNG demonstrates robust financial health with strong profitability and a stable balance sheet. While cash flow management poses some challenges, the company maintains solid financial metrics that support its operations and growth in the fossil fuels industry.

Income Statement

Positive

FLEX LNG shows strong profitability with a stable gross profit margin and EBIT margin over the years. However, the net income has been fluctuating, indicating potential volatility. Revenue growth is inconsistent but has shown resilience in challenging years.

Balance Sheet

Positive

The balance sheet reflects a moderate debt-to-equity ratio and a solid equity ratio, indicating a stable capital structure. The return on equity is strong, but there is potential risk due to substantial total debt levels.

Cash Flow

Positive

Operating cash flow is consistently positive, showing good cash conversion from operations. However, free cash flow has seen significant fluctuations, which may indicate challenges in managing capital expenditures and financing needs.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
356.35M	371.02M	347.92M	343.45M	164.46M
	Gross Profit
207.58M	227.62M	209.76M	209.04M	81.92M
	EBIT
197.79M	217.16M	200.62M	201.16M	75.62M
	EBITDA
298.89M	302.20M	336.96M	270.99M	117.47M
	Net Income Common Stockholders
117.68M	120.04M	188.04M	162.21M	8.11M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
437.15M	410.43M	332.33M	200.65M	128.88M
	Total Assets
2.67B	2.71B	2.68B	2.57B	2.30B
	Total Debt
1.81B	1.81B	1.71B	1.63B	1.40B
	Net Debt
1.37B	1.40B	1.38B	1.43B	1.27B
	Total Liabilities
1.86B	1.86B	1.77B	1.68B	1.47B
	Stockholders Equity
806.63M	847.65M	907.09M	889.39M	835.17M
Cash Flow		Free Cash Flow
182.79M	175.03M	219.88M	-51.09M	-602.09M
	Operating Cash Flow
182.80M	175.03M	219.88M	214.84M	89.30M
	Investing Cash Flow
-4.00K	-2.00K	-5.00K	-265.93M	-691.39M
	Financing Cash Flow
-155.61M	-96.54M	-88.76M	123.10M	603.32M

FLEX LNG Technical Analysis

Technical Analysis Sentiment

Positive

Last Price23.05

Price Trends

50DMA

22.49

Positive

100DMA

22.87

Positive

200DMA

23.51

Negative

Market Momentum

MACD

0.10

Negative

RSI

56.49

Neutral

STOCH

87.57

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FLNG, the sentiment is Positive. The current price of 23.05 is above the 20-day moving average (MA) of 22.20, above the 50-day MA of 22.49, and below the 200-day MA of 23.51, indicating a neutral trend. The MACD of 0.10 indicates Negative momentum. The RSI at 56.49 is Neutral, neither overbought nor oversold. The STOCH value of 87.57 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FLNG.

FLEX LNG Peers Comparison

Overall Rating

UnderperformOutperform

Sector (55)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LPG	75 Outperform	$878.78M	5.24	15.72%	―	-24.25%	-48.08%
TK	73 Outperform	$539.67M	4.52	18.55%	―	-16.70%	-8.04%
FLNG	72 Outperform	$1.21B	10.44	14.23%	13.19%	-3.95%	-2.25%
NVGS	70 Outperform	$846.37M	10.26	7.14%	1.64%	2.89%	8.17%
DLNG	67 Neutral	$121.29M	3.16	10.37%	2.96%	-2.54%	34.80%
GLNG	62 Neutral	$3.92B	76.76	2.43%	2.67%	-12.75%	―
Sector *	55 Neutral	$7.05B	3.40	-6.09%	6.09%	-0.43%	-51.04%

* Energy Sector Average

Performance Comparison

FLNG

FLEX LNG

23.05

-0.08

-0.35%

GLNG

Golar LNG

38.86

14.12

57.07%

Teekay

6.46

0.13

2.05%

NVGS

Navigator Holdings

12.08

-2.74

-18.49%

DLNG

Dynagas LNG Partners

3.37

-0.24

-6.65%

LPG

Dorian LPG

20.30

-16.91

-45.44%

FLEX LNG Earnings Call Summary

Earnings Call Date: Feb 4, 2025 | % Change Since: -7.58% | Next Earnings Date: May 30, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook with strong financial performance, stable revenues, and successful long-term charter extensions. However, challenges such as declining freight rates, geopolitical uncertainties, and regulatory pressures present significant hurdles. The company's strategic backlog and financial stability position it to weather near-term challenges, while long-term prospects depend on market recovery and regulatory adaptation.

Highlights

Stable Revenue and Earnings

Revenues for Q4 2024 came in at $89.5 million, in line with guidance, with net income driven by derivative income of $20.1 million, resulting in adjusted net income of $30.8 million. Earnings per share were $0.84 or $0.57 on an adjusted basis.

Long-Term Charter Extensions

Flex LNG secured extensions for ships Flex Resolute and Flex Courageous until 2032, with options to 2039, and a new 15-year charter for Flex Constellation starting in Q1 or Q2 2026, extending to 2041.

Strong Cash Position and Dividends

Flex LNG holds a cash balance of $437 million and declared a dividend of $0.75 per share, resulting in a total dividend of $3 for 2024, implying a running yield of about 12%.

Operational Efficiency

Achieved 99.7% technical uptime and zero lost time injuries in 2024, indicating strong operational performance and safety standards.

Lowlights

Slump in Freight Rates

Freight rates significantly decreased to around $10,000 per day, which is uneconomical for older tonnage, due to changes in trading patterns and increased ship availability.

Challenges in European and Asian Markets

European imports decreased in 2024, and there are uncertainties in Asian markets due to geopolitical tensions and potential tariffs on U.S. LNG from China.

Environmental and Regulatory Challenges

The introduction of EU ETS and FuelEU Maritime regulations impose additional costs and complexities on operations, particularly affecting older ships.

Company Guidance

In the fourth quarter of 2024, Flex LNG reported revenues of $90.9 million, slightly exceeding their guidance of $89.5 million, with a significant contribution of $1.4 million from EU ETS Carbon Emissions compensation. The company achieved a net income of $30.8 million, largely driven by a $20.1 million derivative income, resulting in adjusted earnings per share of $0.57. Flex LNG declared a dividend of $0.75 per share, totaling $3 per share for the year, reflecting a 12% yield. The company reinforced its robust financial position with $437 million in cash and a strong backlog, ensuring steady expectations for 2025. The anticipated time charter equivalent earnings for 2025 are in the mid-$70,000 range, with revenues projected between $340 million and $360 million, and an EBITDA forecast of $250 million to $270 million. Despite market challenges, Flex LNG remains optimistic with extensive contract coverage extending to 2032 and beyond, and plans to delist from the Oslo exchange to streamline compliance costs.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.