However, looking at Frontier’s fundamentals will make you want to think twice about making the leap into this company’s stock. First, it should be noted that Frontier’s dividend shrank (emphasis mine) from $1.00 per share in 2009 to its current $0.40 per share. In 2011 and 2012 Frontier paid out 100% and 53%, respectively, of its free cash flow in dividends.
This correlates to a steady decline in Frontier’s profitability. Frontier’s income from continuing operations shrunk from $156 million in 2010 to roughly $153 million in 2012, translating into a decline in continuing operating margins from 4% in 2010 to 3% in 2012.
In addition, Frontier sits on a terrible balance sheet. While Frontier possesses cash equating to 32% of its equity base, thanks to a debt offering, its long-term debt to equity ratio stands at an astounding 203% of stockholder’s equity. Its operating income can barely meet its interest obligations, exceeding it by only 1.4 times as of the end of 2012