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Frontline (FRO) Shares Down 3.3% Since Q4 Earnings: Here's Why

Weakness in the tanker market has been hurting Frontline Limited FRO for quite some time. The sharp reduction in the volume of crude oil stored on ships is a bane for this shipping company. As a consequence, the depressing scenario surrounding the oil tanker market affected Frontline’s fourth-quarter 2020 earnings results too, which got released on Feb 19. Shares of the company, currently carrying a Zacks Rank #5 (Strong Sell), has predictably declined 3.3% since the earnings report.

 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Delving Deep

Frontline incurred loss (excluding 5 cents from non-recurring items) of 10 cents per share in fourth-quarter 2020, wider than the Zacks Consensus Estimate of a loss of 5 cents. The company delivered earnings of 54 cents per share in the year-ago quarter when the shipping industry was free from coronavirus-induced disruptions.

It posted revenues worth $174.9 million in the final quarter of 2020. On an adjusted basis, revenues came in at $100.6 million, below the Zacks Consensus Estimate of $118.7 million. Moreover, the top line plummeted 70.2% year over year. Results were hit by the contraction in the global tanker market. Notably, per Frontline management, the global tanker markets contracted sharply during the second half of 2020, after a significant retraction in world growth.

However, total operating expenses in the reported quarter declined 12.6% to $179 million owing to 34.7% reduction in voyage operating expenses. In the fourth quarter, the company reported spot TCEs or average daily time charter equivalents for VLCCs, Suezmax tankers and LR2 tankers of $17,200, $9,800 and $12,500 per day, respectively.

The company exited the year with cash and cash equivalents of $174.7 million compared with $174.2 million at 2019 end. The short-term debt and current portion of the long-term debt declined 62% year over year to $167.1 million at the end of 2020.

Sectorial Snapshots

Let’s take a look at some of the other earnings reports from companies within the Zacks Transportation sector.

United Airlines UAL incurred a loss (excluding 6 cents from non-recurring items) of $7 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $6.56. Moreover, operating revenues of $3,412 million lagged the Zacks Consensus Estimate of $3,420.4 million.

J.B. Hunt Transport Services JBHT reported earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.27. Total operating revenues of $2,737.7 million also surpassed the Zacks Consensus Estimate of $2,514.3 million.

Delta Air Lines DAL incurred a loss (excluding $1.34 from non-recurring items) of $2.53 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $2.43. However, total revenues of $3,973 million topped the Zacks Consensus Estimate of $3,754.5 million.

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Delta Air Lines, Inc. (DAL): Free Stock Analysis Report
 
United Airlines Holdings Inc (UAL): Free Stock Analysis Report
 
J.B. Hunt Transport Services, Inc. (JBHT): Free Stock Analysis Report
 
Frontline Ltd. (FRO): Free Stock Analysis Report
 
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