NEW YORK ( TheStreet) -- Frontline (NYSE: FRO) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally weak debt management, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 143.3% when compared to the same quarter one year ago, falling from $81.31 million to -$35.24 million.
  • The debt-to-equity ratio is very high at 3.76 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, FRONTLINE LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $42.95 million or 72.10% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 74.87%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 143.26% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

Frontline Ltd., through its subsidiaries, engages in the ownership and operation of oil tankers and oil/bulk/ore (OBO) carriers. It primarily transports crude oil; and raw materials, such as coal and iron ore. The company's OBO carriers transport dry cargo. The company has a P/E ratio of 3.1, below the average transportation industry P/E ratio of 5.2 and below the S&P 500 P/E ratio of 17.7. Frontline has a market cap of $504.5 million and is part of the services sector and transportation industry. Shares are down 73.6% year to date as of the close of trading on Tuesday.

You can view the full Frontline Ratings Report or get investment ideas from our investment research center.
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