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New Fortress Energy Is Pumping Up, But Balance Sheet Is A Concern

Oct. 01, 2021 12:14 PM ETNew Fortress Energy Inc. (NFE) Stock21 Comments
Badsha Chowdhury profile picture
Badsha Chowdhury


  • NFE has earned contracts to supply natural gas in LNG terminals and power plants in different international locations.
  • It has also added FLNG (Floating Liquefied Natural Gas) facilities to its portfolio.
  • The company aims to boost operating profit substantially in 2022 and 2023 based on various new projects.
  • However, its cash flows have been negative, while the balance sheet remains leveraged.

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NFE Builds To Break Out

New Fortress Energy (NASDAQ:NFE) concentrates on established LNG terminals in the international markets and introduces FLNG in its portfolio. After a quiet 2020, the company's baseline is transforming following the Hygo and

This article was written by

Badsha Chowdhury profile picture
I have more than 14 years of experience in analyzing and writing on stocks. I write on both long and short sides in an unbiased manner. I have been covering the energy sectors for the past 7 years, with the primary focus on the oilfield equipment services sector. I also cover the Industrial Supply industry. I occasionally co-author with Seeking Alpha contributor Thomas Prescott.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (21)

28 Nov. 2021
Year end tax loss selling may keep pressure on this one. Will check again in mid-December.
@Badsha Chowdhury Is this a typo? "I expect the company's EBITDA to increase in the next two years. However, in NTM (or next 12 months) 2024, the model suggests decreasing EBITDA." Why 2024?
Badsha Chowdhury profile picture
@usera2020 The model calculates lower EBITDA in 2024. I should have shown this in the chart. Thank you for reading.
fisherick profile picture
Why the flush on heavy volume today?
Darren McCammon profile picture

Basing around $20, people taking profits are being met by willing buyers.
Darren McCammon profile picture
LNG carrier rates top $260,000 per day as arbitrage profits exceed $100m
Francesco122222 profile picture
@darren McCammq great finding! FNE is directly benefiting from this situation as they are long with cargoes. They are expecting over 300M in earnings for Q4 and I see upside to this given the current situation
Viking Raider profile picture
Reminds me of Tesla, so it might go very high! Plenty of hope and expectations without any substantial earnings! Big personality behind the company selling, selling, selling and investors buying, buying, buying! The profits are promised to come tomorrow!
prudent 576 profile picture
@Biological I got ZIM's and NFE's numbers right here on public Seeking Alpha website.
prudent 576 profile picture
@Biological I like NFE's growth. For NFE in 2022 & 2023 sales/revenue is estimated to increase 88.7% & 39.6% and may even be revised upward. ZIM for the same period is estimated to be -17.2% and -15.6%. I'll stay long NFE.
Biological profile picture
@prudent 576 Great; no sure where you got ZIM's revenue growth numbers but, if you are keen to see growth, boy, just look at their latest 2Q21 presentation below:


2Q21 revenue is up +200% over prior year 2Q20.

EBITDA went from US$145 million to $1,335 billion in the same period (2Q21 over 2Q20).

prudent 576 profile picture
NFE share price will double along with it's revenue within the next 2 years and the balance sheet will look fantastic.
Biological profile picture
@prudent 576 ZIM is more likely to double from here (than NFE) and it is already net debt-free (2Q21), utterly clean BS. And it will pay about $20/share in divs (for 2021) payable in 2022 (check their dividend policy). 3Q21, as well as 4Q21, will be blow-out quarters.
@Biological it’s 2.00 not 20.00
Biological profile picture
@BKbiobull Hi. No, it's $20 (or it is to be)! The $2 has been declared and paid (in Sept. 21) but there is more to come; I refer to their dividend policy, as announced (see 2Q21 presentation). They will pay -- and until then it is not yet a dividend, of course - some 30%-50% of earnings in dividends. If you check J. Mintzmyer's article, and discussion, on ZIM (see below link), you will see that 30% to 50% of 2021 earnings is about +/-$20/share (a solid estimate since we know 6 months and we know 3Q, and likely, 4Q, will be excellent (better than 2Q)). So, there you have it.

Today, you are essentially buying the rest of ZIM (post 2021) for about $45-$20=$25 which is an insane price. And we know that 2022 is looking very, very good for containers. ZIM touched a high of $62, recently. My guess, and JM's, is that ZIM will reach at least $70. I think it will go even higher as the market starts to appreciate the above and that 2022 will look as good as 2021 for containers. If that is the case, you will get another $20/share in divs in early 2023 (for 2022 earnings).

Also, ZIM was at 2Q21 essentially net debt free. I think it will soon be debt free, perhaps by 4Q21. They are gushing cash and have a good capital allocation strategy -- repay debt, divs and, soon, I think, share buybacks.

Well said Sgold139, I feel the exact same. Buying every chance I get.
So does this company ship or sell LNG into Europe? How are they exposed to LNG pricing? I am guessing they do not produce their own nat gas so have to source it. Are there hedges in place where they can lock in those differentials? Europe nat gas spiked to 100 euros mtbu so is there a massive arbitrage opportunity here?
@BKbiobull the pricing terms are unclear and what is the basis of their lng contracts is unknown.

Theres a lot of financial engineering required so it makes sense if they could give us some rough npv per project or sensitivities
Wes Edens, the CEO and the largest investor in NFE undoubtedly understands the balance sheet based on his extensive experience with Lehman Brothers and Black Rock
Mr. Edens, during the multiple investor calls he has participated in has identified the sources of the several billion dollars of projected revenue arriving during the next 18 months; furthermore the company has been making announcements almost weekly of additional “signed deals” that will add additional top line growth since the last earnings call.
With the projected very profitable sales, the deals in negotiations (think of the MOU with the Philippines) and the fact that every oil fueled generation facility in the world would wish to convert to gas or nuclear for both cost and environmental concerns, the balance sheet will quickly have enviable ratios
Mr Edens is one of the most successful investors in the world; he has a long history of being a most reputable business person
Don’t worry about the NFE debt...buy as much stock as you can because this a very valuable enterprise in its infancy
Stanley Goldberg
Francesco122222 profile picture
Hello. Nice article! well documented overall. However one clarification: cashflow from operations were actually positive and not negative (altho marginally at 500k) in the last 3 months (so in Q2 this year). But yea cash from from operations in H1 this year are negative (-111M) because of Q1.
But I think the trend here is very encouraging.

Title says that u are bullish but your comments overall are more bearish than bullish so I am a bit confused. Are u bullish of bearish?
Badsha Chowdhury profile picture
@Francesco122222 Thanks for reading and the comments. CF was negative in the first 6 months of the year. I would say I am mildly bullish, given all the factors.
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