Frontier Group Holdings Inc (ULCC, Financial), an ultra-low-cost carrier, has experienced a significant fluctuation in its stock price recently. With a market capitalization of $1.53 billion and a current price of $6.85, the company's stock has seen a notable decline of 11.70% over the past week. However, looking at a broader time frame, Frontier's stock has gained an impressive 41.39% over the past three months. Despite this growth, the GF Value of $16.09 suggests caution, as the current and past GF Valuation both indicate a Possible Value Trap, advising investors to think twice before making a move.
Introduction to Frontier Group Holdings Inc
Frontier Group Holdings Inc operates in the transportation industry, specifically as an ultra-low-cost carrier. The company prides itself on its "Low Fares Done Right" philosophy, managing a fleet of 120 Airbus single-aisle aircraft. These aircraft are designed for efficiency, contributing to Frontier's status as one of the most fuel-efficient airlines in the U.S. The company's business model is streamlined into a single unit that focuses on providing affordable air transportation for passengers.
Assessing Frontier's Profitability
Frontier's Profitability Rank stands at 5/10, indicating a moderate level of profitability relative to other companies. The airline's operating margin is currently at -0.06%, which is better than 16.03% of 973 companies in the same sector. In terms of return on equity (ROE), Frontier has a rate of -2.11%, surpassing 13.89% of its peers. The return on assets (ROA) is -0.23%, which is more favorable than 18.37% of competitors. Additionally, the return on invested capital (ROIC) is at 0.01%, outperforming 18.18% of similar companies. Over the past decade, Frontier has managed to be profitable for five years, which is better than 26.85% of 957 companies in the industry.
Growth Trajectory of Frontier Group Holdings
Frontier's Growth Rank is an impressive 9/10, reflecting the company's strong expansion in terms of revenue and profitability. The 3-Year Revenue Growth Rate per Share stands at 41.00%, which is higher than 91.75% of 921 companies in the industry. The 5-Year Revenue Growth Rate per Share is 11.40%, outpacing 78.29% of 852 companies. Looking ahead, the Total Revenue Growth Rate (Future 3Y To 5Y Est) is projected at 13.90%, which is more optimistic than 84.73% of 275 companies.
Key Shareholders in Frontier Group Holdings
PRIMECAP Management (Trades, Portfolio) is the leading shareholder in Frontier, holding 113,200 shares, which translates to a 0.05% stake in the company. This investment reflects confidence from a significant institutional investor, which can be an important factor for individual investors to consider.
Frontier's Competitive Landscape
When comparing Frontier to its competitors, it's clear that the company holds a substantial market cap advantage. Sun Country Airlines Holdings Inc (SNCY, Financial) has a market cap of $779.114 million, Allegiant Travel Co (ALGT, Financial) is valued at $1.13 billion, and Air Transport Services Group Inc (ATSG, Financial) stands at $836.812 million. Frontier's larger market cap suggests a stronger position within the industry, potentially offering a more stable investment opportunity.
Conclusion: Evaluating Frontier's Market Position
In summary, Frontier Group Holdings Inc's stock performance has been a mixed bag, with a recent downturn but a significant gain over the last quarter. The company's valuation, as indicated by the GF Value, suggests that investors should be cautious and consider the potential of a value trap. Frontier's profitability metrics, while not leading the industry, show resilience in a competitive market. The company's growth rates are robust, indicating a strong trajectory for future revenue expansion. With a solid shareholder base and a competitive market cap, Frontier is positioned as a noteworthy player in the ultra-low-cost carrier space. However, investors should weigh these factors carefully against the broader industry trends and Frontier's current valuation before making investment decisions.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
