Frontier Group Holdings Inc (ULCC, Financial), an ultra-low-cost carrier, has experienced a significant fluctuation in its stock price over recent periods. With a current market capitalization of $1.62 billion and a stock price of $7.26, the company has seen a 2.96% loss over the past week. However, looking at a broader timeframe, Frontier's stock has surged by an impressive 65.63% over the past three months. Despite this growth, the GF Value of $16.03 suggests caution, labeling the stock as a possible value trap, a sentiment that has remained unchanged from three months ago when the GF Value was at $17.97.
Understanding Frontier Group Holdings
Frontier Group Holdings operates in the transportation industry, specifically as an ultra-low-cost carrier. The company prides itself on its "Low Fares Done Right" philosophy, managing a fleet of 120 Airbus single-aisle aircraft. These aircraft are a mix of A320ceos, A320neos, A321ceos, and A321neos, which have been optimized for fuel efficiency through seating configuration, weight-saving tactics, and a streamlined baggage process. Frontier operates as a single business unit, providing air transportation for passengers across the United States.
Profitability Analysis
Frontier's Profitability Rank stands at 5/10, indicating a moderate level of profitability. The company's operating margin is currently at -0.06%, which is better than 16.79% of its peers in the industry. Its Return on Equity (ROE) is -2.11%, surpassing 14.36% of competitors, while the Return on Assets (ROA) is -0.23%, outperforming 19.31% of similar companies. The Return on Invested Capital (ROIC) is at a minimal 0.01%, yet it still fares better than 18.92% of industry counterparts. Over the past decade, Frontier has managed to be profitable for five years, which is more than 27.76% of its peers.
Growth Prospects
Frontier's Growth Rank is currently at 3/10, reflecting some challenges in its growth trajectory. However, the company has shown strong performance in revenue growth, with a 3-Year Revenue Growth Rate per Share of 41.00%, which is better than 91.9% of its industry peers. The 5-Year Revenue Growth Rate per Share stands at 11.40%, outpacing 77.58% of competitors. These figures demonstrate Frontier's ability to expand its revenue streams significantly over time.
Investor Confidence
PRIMECAP Management (Trades, Portfolio) is a notable holder in Frontier, with 113,200 shares, representing a 0.05% share percentage. This investment indicates some level of confidence from institutional investors in the company's future prospects.
Competitive Landscape
When compared to its closest competitors by market cap, Frontier stands out. Sun Country Airlines Holdings Inc (SNCY, Financial) has a market cap of $793.503 million, Allegiant Travel Co (ALGT, Financial) is valued at $1.33 billion, and Air Transport Services Group Inc (ATSG, Financial) comes in at $800.507 million. Frontier's larger market cap suggests a stronger position within the market relative to these competitors.
Conclusion
In summary, Frontier Group Holdings Inc has seen a remarkable 65.63% gain in its stock price over the past three months, despite recent short-term losses and ongoing valuation concerns. The company's position within the transportation industry is solid, with a significant market cap advantage over its closest competitors. While profitability metrics present a mixed picture, Frontier's impressive revenue growth rates indicate potential for future success. The presence of significant holders like PRIMECAP Management (Trades, Portfolio) also adds a layer of investor confidence. As the company continues to navigate the competitive landscape, investors should weigh these factors carefully, especially in light of the GF Value's cautionary stance.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
