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Frontline (FRO) to Report Q1 Earnings: What's in the Offing?

Maharathi Basu

Frontline Ltd. FRO is scheduled to release first-quarter 2020 results on May 20.

The company has a mixed earnings record, having delivered a positive surprise in two of the last four quarters while missing estimates in the remaining one. The average miss is 6.3%.

Frontline Ltd. Price and EPS Surprise


Frontline Ltd. Price and EPS Surprise

Frontline Ltd. price-eps-surprise | Frontline Ltd. Quote

Moreover, the Zacks Consensus Estimate for first-quarter earnings has been revised 8.9% downward over the past 60 days.

Against this backdrop, let’s delve into the factors that might have impacted the company’s March-quarter performance.

Frontline’s performance in the to-be-reported quarter is expected to have been affected by the coronavirus-induced supply-chain disruptions. Notably, the COVID-19 pandemic has spelt doom for the shipping industry, which is responsible for transporting the majority of goods involved in world trade and is rightfully considered the life line of the global economy.

Moreover, the adoption of new rules imposed by the International Maritime Organisation effective Jan 1, 2020 might have weighed on the company’s performance due to some short-term disturbance in the shipping network. The regulations are aimed at curbing pollution caused by ships across the globe. Further, these headwinds are likely to have restricted the supply of new tanker fleet for companies in the same space as was the case with another shipping company, namely Euronav NV EURN, which reported first-quarter results earlier this month.

However, the increase in tanker freight rates following Saudi Arabia’s decision to charter multiple super-tankers for shipping crude oil to customers globally is likely to have boosted Frontline’s first-quarter performance. The plunge in oil prices (by 66.5%) during the January-March period is a bonus and is expected to have bolstered this oil tanker operator’s bottom line in the to-be-reported quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Frontline this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But that is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Frontline has an Earnings ESP of 0.00% as the Most Accurate Estimate is in line with the Zacks Consensus Estimate of 92 centsper share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Frontline carries a Zacks Rank #2, currently.

Highlights of Q4 Earnings    

In the last reported quarter, the company came up with a negative earnings surprise of 25%. However, the bottom line skyrocketed in excess of 100% year over year.Additionally, revenues improved 3.3% to $224.2 million.

Stocks to Consider

Investors may consider Baidu BIDU and CBL Properties CBL as these stocks have the right combination of elements to beat on earnings this reporting cycle.

Baidu has an Earnings ESP of +4.45% and is Zacks#3 Ranked. The company will report first-quarter earnings on May 18.

CBL Properties has an Earnings ESP of +8.11% and a Zacks Rank #3. The company will report first-quarter earnings on May 18.

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Baidu, Inc. (BIDU) : Free Stock Analysis Report
CBL Associates Properties, Inc. (CBL) : Free Stock Analysis Report
Frontline Ltd. (FRO) : Free Stock Analysis Report
Euronav NV (EURN) : Free Stock Analysis Report
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