Frontline (FRO) Is Strong On High Volume Today

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.

Trade-Ideas LLC identified Frontline ( FRO) as a strong 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 $12.2 million.
  • FRO has traded 1.0 million shares today.
  • FRO is trading at 3.69 times the normal volume for the stock at this time of day.
  • FRO is trading at a new high 4.26% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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., a shipping company, through its subsidiaries, owns and operates oil tankers and oil/bulk/ore carriers. The company provides seaborne transportation of crude oil and oil products. Currently there is 1 analyst that rates Frontline a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Frontline has been 2.5 million shares per day over the past 30 days. Frontline has a market cap of $343.8 million and is part of the services sector and transportation industry. The stock has a beta of 2.34 and a short float of 7.6% with 1.89 days to cover. Shares are up 2.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Frontline as a sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

Highlights from the ratings report include:
  • The gross profit margin for FRONTLINE LTD is currently lower than what is desirable, coming in at 26.96%. Regardless of FRO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FRO's net profit margin of -9.60% significantly underperformed when compared to the industry average.
  • Despite the weak revenue results, FRO has significantly outperformed against the industry average of 38.6%. Since the same quarter one year prior, revenues slightly dropped by 5.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has significantly increased by 172.18% to $16.96 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 -53.17%.
  • Investors have driven up the company's shares by 31.89% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the future course of this stock, we feel that the risks involved in investing in FRO do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • FRONTLINE LTD has improved earnings per share by 20.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, FRONTLINE LTD continued to lose money by earning -$1.66 versus -$2.38 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus -$1.66).

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