Dynagas LNG Partners LP (DLNG) is a liquified natural gas (LNG) maritime transportation company established in 2004, explains Faris Sleem, a specialist in low-priced stocks and editor of The Bowser Report.
The company offers in-house ship management services and has a fleet of six LNG carriers. Increasing demand for LNG and the company’s high-quality contracts with major LNG companies have set DLNG up for long-term success.
Fleet utilization is vital to long-term success and we consider this to be one of DLNG’s strengths seeing that it has averaged a 100% utilization rate on a quarterly basis over the past two years. The average remaining charter duration for the DLNG fleet is currently 6.4 years. The total estimated contract backlog is just under $1 billion.
Revenue has been in a steady upward trend since its IPO in 2013. Gross profit has moved up hand-in-hand with revenue while net income recently flipped positive in 2020. Both revenue and gross profit increased slightly in 2021 while net income jumped 85% , year-over-year.
Consistent growth has been the primary catalyst for value creation since 2018. Additionally, the company has beaten earnings expectations for six of the last eight quarters.
DLNG’s valuation is incredibly attractive given the current state of the stock market. The stock is trading at one-third of its book value, and its price/book (P/B) ratio of 0.37 is 47% below its five-year average.
Meanwhile, its P/E and price/sales ratios indicate a 71% and 27% undervaluation, respectively, relative to its competitors. With book value increasing 32% since 2019, we are excited to see what DLNG has in store for patient shareholders.
DLNG offers a unique value investment opportunity. Consistent financial performance and deleveraging have created a solid foundation for future growth, and exposure to a strong LNG market and leveraging of in-house technical innovation pave the way for value creation in the years to come. Buy below $3 a share.