DLNG

We rate Dynagas LNG Partners LP (DLNG) as a Buy with a composite score of 65.8/100 at a current price of $3.94. The stock scores above average across the majority of our six quantitative factors and ranks #256 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in value (93th percentile) and quality (78th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (38th percentile) and investment (56th percentile) tempers our overall conviction. We assign a Narrow Moat rating (49/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Dynagas LNG Partners LP holds a lower-quartile position (#43 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 65.8/100 places it at rank #256 in our full 7,333-stock universe. At $198M in market capitalization, Dynagas LNG Partners LP is a small-cap player in the Transportation, Communications, Electric, Gas, And Sanitary Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -3% combined with momentum at the 38th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 100% (+44.9pp vs sector) narrow to operating margins of 50% (+31.9pp vs sector) and net margins of 33.0%, yielding a gross-to-net conversion rate of 33%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $3.94, Dynagas LNG Partners LP appears undervalued relative to its fundamentals. Our value factor score of 93/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 3.8x (a 78% discount to the sector median of 16.9x), EV/EBITDA of 0.8x (discounted to peers), P/B of 0.3x, P/S of 0.2x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to Dynagas LNG Partners LP. The company exhibits strong financial stability with a beta of 0.40, and a stability factor in the 67th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.40 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 67th percentile and quality factor at the 78th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 100% provide a buffer against cost pressures; above-average stability (67th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Dynagas LNG Partners LP's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 42.6%, best-in-class net margins of 33.0%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Dynagas LNG Partners LP meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 0.91% dividend yield, and the combination of 24.4% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Dynagas LNG Partners LP receives a Buy rating with a composite score of 65.8/100 (rank #256 of 7,333). Our quantitative framework assigns a Narrow Moat (49/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 67/100.

Our analysis supports a constructive view on Dynagas LNG Partners LP. The combination of identifiable competitive advantages, low uncertainty, and exemplary capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.