Frontier Group Holdings, Inc. (NASDAQ: ULCC)

Sector: Industrials Industry: Airlines CIK: 0001670076
Market Cap 1.19 Bn
P/B 2.75
P/E -8.77
P/S 0.32
ROIC (Qtr) -2.86
Div Yield % 0.00
Rev 1y % (Qtr) -5.24
Total Debt (Qtr) 5.03 Bn
Debt/Equity (Qtr) 11.59
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About

Frontier Group Holdings, Inc., known in the industry as Frontier Airlines, is a reputable low-cost carrier operating within the United States and select international destinations in the Americas. The company specializes in providing affordable passenger airline services, primarily catering to leisure travelers. With a fleet of 136 Airbus single-aisle aircraft, Frontier Airlines offers flights to over 90 airports throughout the United States and select international destinations. Frontier Airlines generates revenue through various channels, including...

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Investment thesis

Bull case

  • Tangible assets of 6.67B provide exceptional 185.39x coverage of deferred revenue 36M, showing strong service capability backing.
  • Tangible assets of 6.67B provide robust 7.67x coverage of other current liabilities 870M, indicating strong asset backing.
  • Cash reserves of 566M provide solid 3.33x coverage of other non-current liabilities 170M, indicating strong liquidity.
  • Cash position of 566M provides strong 15.72x coverage of deferred revenue 36M, ensuring service delivery capability.
  • Cash reserves of 566M exceed inventory value of 90M by 6.29x, indicating strong liquidity and inventory management.

Bear case

  • Operating cash flow of (347M) provides insufficient coverage of deferred revenue obligations of 36M, which is -9.64x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of (347M) shows concerning coverage of stock compensation expenses of 20M, with a -17.35 ratio indicating potential earnings quality issues.
  • Free cash flow of (533M) provides weak coverage of capital expenditures of 186M, with a -2.87 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (92M) show weak coverage of depreciation charges of 84M, with a -1.10 ratio indicating high capital intensity and potential reinvestment needs.
  • Operating cash flow of (347M) provides minimal -347x coverage of tax expenses of 1M, suggesting potential tax planning inefficiencies or unsustainable tax positions.

Peer comparison

Companies in the Airlines
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 DAL Delta Air Lines, Inc. 45.93 Bn 9.18 0.72 20.27 Bn
2 UAL United Airlines Holdings, Inc. 37.05 Bn 11.05 0.63 31.04 Bn
3 LUV Southwest Airlines Co 29.18 Bn 66.17 1.04 5.98 Bn
4 AAL American Airlines Group Inc. 9.42 Bn 15.65 0.17 36.06 Bn
5 ALK Alaska Air Group, Inc. 6.72 Bn 67.15 0.47 6.89 Bn
6 SKYW Skywest Inc 4.33 Bn 10.12 1.07 2.47 Bn
7 AERO Grupo Aeromexico, S.A.B. de C.V. 2.64 Bn 7.49 0.49 4.06 Bn
8 JBLU Jetblue Airways Corp 2.20 Bn -3.66 0.24 9.42 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.82 0.75
EV to Cash from Ops. EV/CFO -15.85 -1.78
EV to Debt EV to Debt 1.09 1.92
EV to EBIT EV/EBIT -59.78 12.70
EV to EBITDA EV/EBITDA -79.71 -7.83
EV to Free Cash Flow [EV/FCF] EV/FCF -10.32 4.43
EV to Market Cap EV to Market Cap 4.61 2.37
EV to Revenue EV/Rev 1.47 1.05
Price to Book Value [P/B] P/B 2.75 0.89
Price to Earnings [P/E] P/E -8.77 14.33
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 22,529.03
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 7.43
Dividend per Basic Share Div per Share (Qtr) 0.00 0.11
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -2.56
Interest Coverage Int. cover (Qtr) -2.14 1.76
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -332.56 -69.47
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -1.74 40.07
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 2.71
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -733.32 -58.97
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -189.61 80.32
EBIT Growth (1y) % EBIT 1y % (Qtr) -221.05 -22.88
EBT Growth (1y) % EBT 1y % (Qtr) -429.27 -112.97
EPS Growth (1y) % EPS 1y % (Qtr) -1,425.00 -167.26
FCF Growth (1y) % FCF 1y % (Qtr) -100.38 2,772.29
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -31.58 7.74
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.56 0.74
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.27 0.24
Current Ratio Curr Ratio (Qtr) 0.40 0.56
Debt to Equity Ratio Debt/Equity (Qtr) 11.59 0.61
Interest Cover Ratio Int Coverage (Qtr) -2.14 1.76
Times Interest Earned Times Interest Earned (Qtr) -2.14 1.76
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -0.20 5.51
EBIT Margin % EBIT Margin % (Qtr) -2.47 -0.22
EBT Margin % EBT Margin % (Qtr) -3.62 -3.82
Gross Margin % Gross Margin % (Qtr) 4.20 41.52
Net Profit Margin % Net Margin % (Qtr) -3.60 -4.40