Underperformance of Frontier Group Holdings Stock Persists Despite Upgrade

AInvest
2024.07.19 02:42

Frontier Airlines' stock has declined significantly despite an upgrade and a positive Q2 earnings outlook. The company plans for aggressive capacity expansion, but weakening unit revenues raise concerns. Earnings per share are expected to grow, but revisions have been mixed.

Frontier Airlines' stock has suffered a 38% decline since May, along with a 60% drop over a year. Despite a previous buy rating from the author, the airline's Q2 2024 earnings outlook reveals an aggressive capacity expansion of 12-14%, potentially higher than competitors. The company expects pre-tax margins of 3-6%, contrasting with Spirit Airlines' anticipated losses. Frontier's fleet grounding issues are minimal compared to Spirit's, benefiting from engine choice. Analysts forecast a 6.6% revenue growth for Q2, but downward revisions signal weakening unit revenues. Earnings per share are expected to grow by 55%, though revisions have been mixed.

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