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Why Golar LNG Limited's Shares Popped 16% Today

By Travis Hoium – Nov 30, 2016 at 3:59PM

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There's hope for future profits in LNG shipping, but do today's financials really give investors enough reason to bid up the stock?

Image source: Getty Images.

What happened

Shares of Golar LNG Limited (GLNG 3.54%) jumped as much as 16% today after the company reported earnings from the third quarter. As of 3:20 p.m. EST, shares were still up 12.6% on the day.

So what

Revenue was up 21.2% sequentially to $22.3 million, and operating loss improved from $37.2 million in the second quarter to $28.3 million in the fourth quarter. Management also said that spot-market pricing is improving, and current conditions suggest that first-quarter 2017 utilization and revenue will likely be up versus the third quarter of 2016. This bullish trend has given investors a reason to jump into the stock today.

Management also announced a $0.05-per-share dividend payable to investors of record on Dec. 14, 2016.

It also can't hurt that oil prices jumped over 8% today, making alternatives like liquefied natural gas more attractive to customers. If oil's move higher continues, it could be great news for companies like Golar LNG.

Now what

I'm cautiously optimistic that both the rise in energy prices and the tightening market in LNG shipping will lead to improving financials for Golar LNG. But investors should keep in mind that the company is still losing money, and is expected to lose money through the end of next year. Before buying into the recovery, I want to see more evidence that long-term profits will live up to the expectations that investors are putting on a company with a $2.5 billion market cap.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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