Frontline’s first-quarter EBITDA
As we saw in the previous part of this series, analysts expect a 30% YoY (year-over-year) fall in Frontline’s (FRO) first-quarter revenues. In this part of the series, we’ll see what analysts expect for Frontline’s EBITDA for the first quarter and for the fiscal year.
Along with a fall in Frontline’s revenues, analysts estimate a fall in the EBITDA as well. Analysts’ EBITDA estimate for the first quarter is $33.2 million—a 65% decrease from $97.3 million in the first quarter of 2017. For the second quarter, the EBITDA estimate stands at $32.3 million. The estimate for 2018 is $164.6 million—compared to the 2017 EBITDA of $207.8 million.
Why is the EBITDA important?
The EBITDA indicates a company’s financial performance. The EBITDA tells us about a company’s operating profit. Crude oil tanker companies are highly capital intensive and have high non-cash costs, including depreciation. So, investors should assess a company’s performance based on the EBITDA. Companies can also be valued based on their EV-to-EBITDA ratios.
Based on Frontline’s EBITDA and revenues in the fourth quarter of 2017, its EBITDA margin was 34.7%. Based on Frontline’s estimated revenues and EBITDA, its estimated first-quarter EBITDA margin is 38%.
Many crude (DBO) tanker companies have already released their first-quarter earnings.