Investment Highlights
Why It Matters
Which of these 2 stories sounds closer for this stock?
1. Generates cash flow
The stock generated 4% or more of the share price (called cash flow yield), and shows moderate 10-15% or more growth.
2. Riding a trend
Think Tesla during the pandemic of 2020 when EVs were riding a cultural high, or Nvidia in the current AI boom, or even Figma. These companies don’t have enough yield, or, enough growth, or both - however - they are riding a trend. They have momentum. These can be more volatile - they don’t have the floor of strong cash flow
0
Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield,
Earnings Yield = Net Income / Market Cap
Dividend Yield = Total Dividends / Market Cap is 10%, Dividend Yield is 5.6%, ERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate,
Reflects the premium above risk free assets offered by the investment. is 5.9%, FCF Yield is 12%
Weak multi-year price returns2Y Excs Rtn is -35%
Debt is significantNet D/ENet Debt/Equity. Debt net of cash. Negative indicates net cash. Equity is taken as the Market Capitalization is 59%
1
Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 34%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 34%
Weak revenue growthRev Chg LTMRevenue Change % Last Twelve Months (LTM) is -5.3%, Rev Chg QQuarterly Revenue Change % is -14%
0
Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield,
Earnings Yield = Net Income / Market Cap
Dividend Yield = Total Dividends / Market Cap is 10%, Dividend Yield is 5.6%, ERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate,
Reflects the premium above risk free assets offered by the investment. is 5.9%, FCF Yield is 12%
1
Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 34%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 34%
2
Weak multi-year price returns2Y Excs Rtn is -35%
3
Debt is significantNet D/ENet Debt/Equity. Debt net of cash. Negative indicates net cash. Equity is taken as the Market Capitalization is 59%
4
Weak revenue growthRev Chg LTMRevenue Change % Last Twelve Months (LTM) is -5.3%, Rev Chg QQuarterly Revenue Change % is -14%
1. Frontline reported strong revenues for the second quarter of 2025, significantly surpassing analyst expectations. The company achieved revenues of $480.1 million, exceeding the forecast of $315.38 million. This performance, coupled with a declared cash dividend of $0.36 per share, indicated robust financial health despite an earnings per share (EPS) miss.
2. The tanker market experienced favorable conditions due to geopolitical dynamics and increased trade inefficiencies. Ongoing geopolitical volatility and widening sanctions by the US, G7, and EU contributed to increased oil trade inefficiencies, which bolstered the compliant tanker market. Additionally, the market anticipated a seasonal increase in oil volumes as the northern hemisphere approached fall, further supporting tanker demand and utilization.
1. Frontline reported strong revenues for the second quarter of 2025, significantly surpassing analyst expectations. The company achieved revenues of $480.1 million, exceeding the forecast of $315.38 million. This performance, coupled with a declared cash dividend of $0.36 per share, indicated robust financial health despite an earnings per share (EPS) miss.
2. The tanker market experienced favorable conditions due to geopolitical dynamics and increased trade inefficiencies. Ongoing geopolitical volatility and widening sanctions by the US, G7, and EU contributed to increased oil trade inefficiencies, which bolstered the compliant tanker market. Additionally, the market anticipated a seasonal increase in oil volumes as the northern hemisphere approached fall, further supporting tanker demand and utilization.
3. Frontline benefited from improved spot tanker rates and strong forward bookings. Spot tanker rates strengthened throughout 2025, reaching levels comparable to the strong performance of the prior three years and significantly above long-term averages. The company also reported robust forward bookings for the fourth quarter of 2025, with high percentages of its VLCC, Suezmax, and LR2/Aframax fleet days secured at favorable rates.
4. Multiple analyst firms issued positive ratings and increased price targets for Frontline. During the period, analysts from firms such as Jefferies Financial Group, BTIG Research, and Evercore ISI reaffirmed "buy" or "outperform" ratings and raised their price targets for Frontline. Notably, BTIG Research increased its target price to $30.00, and Evercore ISI raised its target to $26.00, contributing to the stock reaching a new 52-week high.
5. Strategic fleet management and a strong liquidity position underpinned investor confidence. Frontline proactively refinanced debt on 24 VLCCs to reduce margins and agreed to sell an older Suezmax tanker, generating approximately $23.7 million in net cash proceeds in the third quarter of 2025. The company maintained a strong liquidity position with $844 million in cash and cash equivalents, and no significant debt maturities until 2030.
[1] Cumulative total returns since the beginning of 2020 [2] Peers: BANL, TMDE, TOPS, ENB, WMB. [3] Win Rate = % of calendar months in which monthly returns were positive [4] Max drawdown represents maximum peak-to-trough decline within a year [5] 2025 data is for the year up to 11/6/2025 (YTD)
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.
[1] Choosing top 10 best bets from each sector quarterly is an alpha producing strategy vs sector benchmark [2] Historical annualized return of 5.4%, alpha of -0.1%, and sharpe of 0.25
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
Comparison of FRO With Other Asset Classes (Last 1Y)
FRO
Sector ETF
Equity
Gold
Commodities
Real Estate
Bitcoin
Annualized Return
30.1%
2.7%
18.5%
45.0%
2.2%
-1.7%
50.6%
Annualized Volatility
52.1%
24.6%
19.6%
19.9%
16.2%
17.9%
37.1%
Sharpe Ratio
0.68
0.06
0.74
1.76
-0.05
-0.24
0.86
Correlation With Other Assets
36.9%
23.2%
14.5%
32.8%
9.8%
5.3%
ETFs used for asset classes: Sector ETF = XLE, Equity = SPY, Gold = GLD, Commodities = DBC, Real Estate = VNQ, and Bitcoin = BTCUSD Smart multi-asset allocation framework can stack odds in your favor. Learn How
Based On 5-Year Data
Comparison of FRO With Other Asset Classes (Last 5Y)
FRO
Sector ETF
Equity
Gold
Commodities
Real Estate
Bitcoin
Annualized Return
41.4%
30.0%
16.8%
15.9%
13.8%
6.7%
50.4%
Annualized Volatility
50.1%
28.3%
17.1%
15.6%
18.9%
19.1%
49.2%
Sharpe Ratio
0.88
0.95
0.80
0.81
0.61
0.27
0.77
Correlation With Other Assets
40.3%
23.2%
11.8%
31.8%
15.0%
8.6%
ETFs used for asset classes: Sector ETF = XLE, Equity = SPY, Gold = GLD, Commodities = DBC, Real Estate = VNQ, and Bitcoin = BTCUSD Smart multi-asset allocation framework can stack odds in your favor. Learn How
Based On 10-Year Data
Comparison of FRO With Other Asset Classes (Last 10Y)
FRO
Sector ETF
Equity
Gold
Commodities
Real Estate
Bitcoin
Annualized Return
12.2%
6.9%
14.3%
12.8%
5.1%
5.0%
78.6%
Annualized Volatility
52.3%
29.9%
18.0%
14.7%
17.7%
20.9%
56.2%
Sharpe Ratio
0.43
0.28
0.68
0.71
0.22
0.21
0.96
Correlation With Other Assets
37.4%
30.2%
5.2%
32.6%
21.4%
6.3%
ETFs used for asset classes: Sector ETF = XLE, Equity = SPY, Gold = GLD, Commodities = DBC, Real Estate = VNQ, and Bitcoin = BTCUSD Smart multi-asset allocation framework can stack odds in your favor. Learn How
