Frontline’s (FRO, Financial) gross profit margin was lower than desirable reaching the 26.96% mark. Despite the gross profit margin’s mixed results, Frontline’s net profit margin of -9.60% is significantly lower than the industry average.
Frontline closed out last Wednesday with their stocks being valued at $2.41, a gain of 1.26% with an ROI of -6.20%. The stock traded at a volume of 2,226,975 shares. The stock’s quarterly performance was -17.18% with its 52-week low hitting 104.24%. The stock’s performance in May hit a -18.86% profit margin. It is expected to be a fast-moving stock in the shipping industry with an EPS growth of 30.60%.
In the last fiscal year, Frontline continued to lose money earning a negative earnings per share. Frontline earned -$1.66 vs -$2.38 in the 2014 fiscal year. The market expects Frontline to earn an EPS of $0.16.
The shipping company underperformed the S&P 500 Index, dropping in price level by 21.08% from a year ago. The company’s net income increased by 0.4% compared year over year increasing from -$13.03 million to -$12.98 million.
Silver lining
Frontline saw significantly better performances, despite its low revenue results, against its industry average of 37.8%. The drop in revenue has not had a massive impact on the company’s bottom line with an increase of 20% in its EPS.
The company reached a market cap of $314.56 million with a trading range between $5.05 and $1.18 over the last year with a 50 day SMA of $2.51 and a 200 day SMA of $2.21.
Company profile
Frontline was founded in 1948 and headquartered out of Hamilton, Bermuda and is a shipping company operating in countries such as the Bahamas, Bermuda, the Cayman Islands, India, the Philippines, Singapore, Norway, and the United Kingdom. Via its subsidiaries, Frontline Ltd owns and runs oil tankers as well as bulk carriers. Frontline also provides transportation across water bodies of crude oil and oil products. The company’s very large crude carriers primarily transport crude oil from the Middle East to Europe and the Caribbean and to Southeast Asia as well. Counting up to December last year, Frontline owned 22 vessels including 14 VLCCs and 8 Suezmax tankers. The company also deals in the vessels acquisition and sales business.
Analysis
Frontline’s gross profit margin for the fourth quarter of its fiscal year 2014 is basically unchanged as compared year over year. Even as sales dropped, net income went up. The company has extremely weak liquidity with a current quick ratio of 0.49 showing a lack of ability to pay for short-term cash needs. Frontline’s liquidity has decreased from the same period last year. This same time saw stockholders’ net worth dropping significantly by 163.36% from the same quarter year over year. These measurements highlight the company’s position to fall into financial turmoil at any given time.
A number of negative factors have led analysts to give Frontline a SELL rating. Factors making it difficult for investors to get positive results outweigh the company’s negatives. Frontline’s weaknesses can be seen in various areas such as poor profit margins and disappointing historical performance of the stock itself.
