Weak On High Volume: Frontline (FRO)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Frontline ( FRO) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Frontline as such a stock due to the following factors:

  • FRO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.2 million.
  • FRO has traded 676,300 shares today.
  • FRO is trading at 4.93 times the normal volume for the stock at this time of day.
  • FRO is trading at a new low 10.04% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on FRO:

Frontline Ltd., through its subsidiaries, is engaged in the ownership and operation of oil tankers and oil/bulk/ore carriers. The company provides seaborne transportation of crude oil and oil products, as well as raw materials, such as coal and iron ore. Currently there are no analysts that rate Frontline a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Frontline has been 1.0 million shares per day over the past 30 days. Frontline has a market cap of $223.5 million and is part of the services sector and transportation industry. Shares are down 23.3% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Frontline as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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 63.6% when compared to the same quarter one year ago, falling from -$36.45 million to -$59.65 million.
  • The gross profit margin for FRONTLINE LTD is rather low; currently it is at 24.68%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -43.98% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 48.59%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 30.43% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • FRONTLINE LTD's earnings per share declined by 30.4% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FRONTLINE LTD reported poor results of -$2.38 versus -$0.91 in the prior year. This year, the market expects an improvement in earnings (-$0.44 versus -$2.38).
  • Net operating cash flow has significantly increased by 669.73% to $17.73 million when compared to the same quarter last year. In addition, FRONTLINE LTD has also vastly surpassed the industry average cash flow growth rate of -1.58%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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