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Frontline’s EBITDA Expected to Rise in 3Q16 despite Weak Revenues

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Analyst expectations

As we saw in the previous part of this series, Wall Street analysts expect a 10% year-over-year fall in Frontline’s (FRO) 3Q16 revenues. In this part of the series, we’ll see what analysts are expecting for Frontline’s EBITDA[1. earnings before interest, tax, depreciation, and amortization] and EPS (earnings per share) for 3Q16 and 2016.

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EBITDA estimates

Despite a fall in revenues, analysts estimate a rise in EBITDA for Frontline (FRO). Analysts’ EBITDA estimate for 3Q16 is $56.8 million, a 67% increase from $34 million in 3Q15.

For 4Q16, the EBITDA estimate for Frontline stands at $67 million. Estimates for 2016 and 2017 are $352 million and $304 million, respectively, compared to the company’s 2015 EBITDA of $342 million.

EBITDA margin

Based on its 2Q16 EBITDA, Frontline’s EBITDA margin is 38%. Based on its estimated revenue and estimated EBITDA, Frontline’s estimated 3Q16 EBITDA margin is 52%.

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EPS estimate

Despite a rise in estimated EBITDA, Wall Street analysts forecast a 93% drop in Frontline’s EPS to $0.00 per share in 3Q16, compared to $0.40 in 3Q15.

Peers’ EBITDA

Many crude (DBO) tanker companies have already released their 3Q16 earnings:

  • DHT Holdings’s (DHT) 3Q16 EBITDA of $29.5 million came in lower than its 3Q15 EBITDA of $54.8 million.
  • Euronav’s (EURN) 3Q16 EBITDA of $69 million was 49% lower than its 3Q15 EBITDA.
  • Nordic American Tankers’s (NAT) EBITDA fell 48% year-over-year in 3Q16.
  • Tsakos Energy Navigation (TNP) has yet to release its 3Q16 results.

Investors interested in broad exposure to industrials can invest in the SPDR Dow Jones Industrial Average ETF (DIA).

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