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Analysts Estimate a 65% Fall in Frontline’s First-Quarter EBITDA

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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.

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EBITDA estimates

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.

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EBITDA margin

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%.

Peers’ EBITDA

Many crude (DBO) tanker companies have already released their first-quarter earnings.

  • Teekay Tankers’ (TNK) first-quarter EBITDA of $21.01 million was 34.6% lower YoY.
  • Gener8 Maritime’s (GNRT) EBITDA fell 79% YoY in the first quarter.
  • Nordic American Tankers’ (NAT) first-quarter EBITDA was $3.9 million—86% lower than its EBITDA of $29.8 million in the first quarter of 2017.
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