On Wednesday, Jefferies made a notable adjustment to its rating on shares of Flex (NASDAQ:FLEX) LNG Ltd. (NYSE: FLNG (OL:FLNG)), elevating the company's stock from Underperform to Hold while maintaining a price target of $24.00. The revision follows Flex LNG's second-quarter results, which exceeded expectations due to the positive impact of terminating an interest rate swap. This financial maneuver contributed to the company's earnings surpassing analyst forecasts.
Flex LNG also continued its regular dividend payments, declaring a dividend of $0.75 per share. In addition to the earnings beat, the company has secured credit approval for the refinancing of three vessels, amounting to $430 million. This refinancing effort is set to release approximately $97 million in cash, further bolstering the company's financial position.
The analyst from Jefferies cited the intact backlog and a pro forma balance sheet that provides solid support for the company's dividend payments as the primary reasons for the upgrade. The maintained price target reflects the firm's assessment of Flex LNG's current market position and future prospects.
Flex LNG's recent financial developments and the subsequent rating change underscore the company's stability and potential for maintaining its dividend payments. The analyst's comments highlight the impact of strategic financial decisions on the company's performance and its ability to meet shareholder expectations.
In other recent news, Flex LNG, a liquefied natural gas shipping company, reported a robust financial position and a significant addition to its contract backlog during its latest earnings call. The company announced contract extensions for two vessels and a new contract for Flex Constellation, potentially extending until 2026.
Despite anticipating a slight dip in Q2 revenues due to seasonality, Flex LNG expressed optimism about its future dividend performance. The company's financials appear strong with no debt maturities before 2028 and zero capital expenditure liabilities. First-quarter revenues were reported at $90.2 million, with a net income of $33.2 million.
The company also revealed a strong cash position with $383 million on hand and is considering a one-off dividend payment. These are recent developments that illustrate Flex LNG's growth and stability in the global LNG market.
It is worth noting that the company did not participate in recent tenders for newbuildings due to high prices and long lead times. Instead, Flex LNG is open to considering second-hand purchases and existing tonnage due to the high cost of newbuildings.
InvestingPro Insights
As Flex LNG Ltd. (NYSE: FLNG) garners attention with its recent rating upgrade by Jefferies, investors may find additional insights from InvestingPro data and tips valuable. The company's strong gross profit margin of 80.67% in the last twelve months leading up to Q1 2024, as well as a robust dividend yield of 12.04%, underpin its financial stability and appeal to shareholders seeking regular income. These figures are particularly noteworthy considering the company's market capitalization of $1.41 billion and a price-to-earnings (P/E) ratio that sits at 10.26, suggesting that the stock may be reasonably valued in the context of its earnings.
InvestingPro Tips further illuminate the company's shareholder-friendly practices, with Flex LNG not only paying a significant dividend but also maintaining a high shareholder yield. Additionally, the company is expected to remain profitable this year, echoing the analyst's confidence in Flex LNG's ability to sustain dividend payments. For those interested in deeper analysis, InvestingPro offers a suite of additional tips on Flex LNG, providing a comprehensive view of the company's financial health and market potential.
It's worth noting that the company's stock trades with low price volatility, which might appeal to investors looking for less risky assets in their portfolio. For further insights and a complete list of tips, investors can explore InvestingPro's platform, which includes a total of 9 additional InvestingPro Tips for Flex LNG.
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