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1. Company Snapshot

1.a. Company Description

Frontline Ltd., a shipping company, engages in the seaborne transportation of crude oil and oil products worldwide.It owns and operates oil and product tankers.As of December 31, 2021, the company operated a fleet of 70 vessels.


It is also involved in the charter, purchase, and sale of vessels.The company was founded in 1985 and is based in Hamilton, Bermuda.

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1.b. Last Insights on FRO

Negative drivers behind Frontline Ltd.'s recent performance include disappointing revenue growth, despite a 14% year-over-year increase in full-year 2024 revenues to $2.05 billion. Analysts have been trimming their sales forecasts, indicating a lack of optimism about the company's prospects. Additionally, the company's Q4 2024 earnings report showed a decline in adjusted profit, with a net profit of $66.7 million, or $0.30 per share, and an adjusted profit of $45.1 million, or $0.20 per share.

1.c. Company Highlights

2. Frontline Ltd. Delivers Mixed Q4 Earnings Amid Challenging Tanker Market Dynamics

Frontline Ltd. reported a profit of $66.7 million, or $0.30 per share, for Q4 2024, with an adjusted profit of $45.1 million, or $0.20 per share. While the company maintained profitability, its adjusted earnings declined by $30 million compared to Q3, primarily due to lower time charter equivalent (TCE) earnings. This dip was partially offset by reduced operating expenses. The company's strong balance sheet, with $693 million in cash and equivalents, underscores its financial resilience. As Lars Barstad noted, Frontline has "significant cash generation potential," with an estimated $447 million, or $2.01 per share, at current spot market earnings.

Publication Date: Mar -01

📋 Highlights
  • Fourth Quarter Earnings Performance: Frontline reported a profit of $66.7 million ($0.30 per share) and an adjusted profit of $45.1 million ($0.20 per share), reflecting a decrease in adjusted profit of $30 million compared to the previous quarter, primarily due to lower TCE (Time Charter Equivalent) earnings.
  • Cash Position and Fleet Efficiency: The company maintains a strong balance sheet with $693 million in cash and equivalents. The fleet's average age is 6.6 years, with 99% eco-vessels, and 2025 cash breakeven rates are estimated at $29,200 per day for VLCCs, $24,000 for Suezmax, and $22,200 for LR2 vessels.
  • Cash Generation Potential: Frontline has significant cash generation potential, with $447 million or $2.01 per share at current spot market rates. A 30% increase in spot rates could boost cash generation by 80%.
  • Geopolitical and Market Dynamics: Sanctions and geopolitical shifts continue to impact trade patterns. The U.S. imports oil from non-traditional sources, and compliant tankers are benefiting from these changes. The global tanker fleet is aging, with limited newbuild orders, positioning Frontline well to capitalize on evolving market conditions.
  • Future Outlook and Fleet Strategy: Frontline remains cautious on newbuilds due to high construction costs and uncertain returns. The company prefers flexible trading strategies and is focused on spot market opportunities. Geopolitical developments, such as potential changes in sanctions, could shift oil trade dynamics and benefit Frontline's fleet positioning.

Fleet Performance and Market Outlook

Frontline's VLCC fleet earned $35,900 per day in Q4, with 80% of Q1 2025 days already booked at $43,700. Suezmax and LR2/Aframax vessels also saw improvements, with Q1 bookings at $35,400 and $29,700, respectively. The company's focus on sanctions compliance and its modern, eco-friendly fleet position it well amid shifting trade dynamics. The global tanker fleet's aging profile, with an average age of 13.7 years, contrasts sharply with Frontline's fleet, which has an average age of 6.6 years and 99% eco-vessels.

Valuation and Strategic Positioning

Frontline's stock currently trades at a price-to-earnings (P/E) ratio of 6.53 and a price-to-book (P/B) ratio of 1.52, reflecting a moderate valuation given the industry's uncertainties. The dividend yield of 12.15% stands out as a key attraction for income-focused investors. However, the negative free cash flow yield of -48.13% raises questions about near-term cash flow generation. Management's cautious approach to new builds and its focus on returning capital to shareholders through dividends suggest a disciplined strategy amid market volatility.

3. NewsRoom

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We Think That There Are More Issues For Frontline (NYSE:FRO) Than Just Sluggish Earnings

Nov -28

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Frontline plc (FRO) Falls After Missing Profit Estimates in Q3

Nov -28

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Frontline (NYSE:FRO) Is Reducing Its Dividend To $0.19

Nov -25

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S&P Futures Tick Lower With Focus on U.S. Retail Sales and PPI Data

Nov -25

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Senior Executives in Dry Bulk, Container, Crude Tanker, Product Tanker, LNG, LPG Shipping to Present in Capital Link Webinar Series

Nov -24

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Does Frontline’s 76% Price Surge in 2025 Still Offer Value After Fleet Expansion News?

Nov -24

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Frontline PLC (FRO) Q3 2025 Earnings Call Highlights: Strong TCE Rates and Robust Liquidity ...

Nov -21

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Frontline: Q3 Earnings Snapshot

Nov -21

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.06%)

6. Segments

Voyage Charter

Expected Growth: 10%

Strong demand for oil transportation, increasing global seaborne trade, and a growing fleet size driven by newbuild deliveries and acquisitions. Additionally, Frontline's cost-cutting initiatives, improved vessel utilization, and a favorable tanker market with rising charter rates contribute to the 10% growth.

Time Charter

Expected Growth: 12%

Strong demand for oil transportation, increasing global oil production, and a low orderbook of new tanker deliveries drive growth in Time Charter revenue for Frontline Ltd. Additionally, the company's modern fleet and cost-cutting initiatives contribute to the 12% growth rate.

Administrative Income

Expected Growth: 9%

Frontline Ltd.'s 9% administrative income growth is driven by increased vessel management services, higher fees from chartering and brokerage activities, and cost savings from operational efficiencies. Additionally, the company's strategic acquisitions and expansion into new markets have contributed to the growth.

7. Detailed Products

Fleet Management System

A comprehensive software solution designed to manage and optimize fleet operations, including vehicle tracking, maintenance scheduling, and fuel management.

Supply Chain Optimization

A data analytics platform that helps businesses optimize their supply chain operations, including demand forecasting, inventory management, and logistics planning.

Field Service Management

A cloud-based software solution designed to manage and optimize field service operations, including work order management, scheduling, and mobile workforce management.

Workforce Management

A comprehensive software solution designed to manage and optimize workforce operations, including time and attendance tracking, scheduling, and leave management.

Route Optimization

A route optimization software solution designed to reduce transportation costs, improve delivery times, and enhance customer satisfaction.

8. Frontline Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Frontline Ltd. operates in a niche market with limited substitutes, but the threat of substitutes is still present due to the availability of alternative products.

Bargaining Power Of Customers

Frontline Ltd. has a large customer base, but the bargaining power of customers is high due to the availability of alternative products and services.

Bargaining Power Of Suppliers

Frontline Ltd. has a diversified supplier base, which reduces the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants is moderate due to the presence of barriers to entry, such as high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the market, leading to a competitive landscape.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 60.29%
Debt Cost 4.34%
Equity Weight 39.71%
Equity Cost 4.34%
WACC 4.34%
Leverage 151.86%

11. Quality Control: Frontline Ltd. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Teekay Tankers

A-Score: 6.9/10

Value: 7.3

Growth: 8.2

Quality: 7.5

Yield: 7.0

Momentum: 6.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
International Seaways

A-Score: 6.7/10

Value: 7.2

Growth: 8.2

Quality: 7.4

Yield: 10.0

Momentum: 2.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Topaz Energy

A-Score: 6.7/10

Value: 3.4

Growth: 8.1

Quality: 6.5

Yield: 9.0

Momentum: 3.5

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Plains GP Holdings

A-Score: 6.6/10

Value: 8.1

Growth: 3.6

Quality: 3.9

Yield: 10.0

Momentum: 4.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Plains All American Pipeline

A-Score: 6.5/10

Value: 7.8

Growth: 3.6

Quality: 4.5

Yield: 10.0

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

View Full Report
Stock-Card
Frontline

A-Score: 5.6/10

Value: 4.9

Growth: 8.8

Quality: 5.3

Yield: 9.0

Momentum: 1.5

Volatility: 4.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

235.8$

Current Price

235.8$

Potential

-0.00%

Expected Cash-Flows