Frontier Developments (FDEV) AI Stock Analysis

• Market Cap: £77.23M
• Dividend Yield: N/A
• Average Volume (3M): 37.92K
• Price to Earnings (P/E): 4.8
• Beta (1Y): 1.03
• Revenue Growth: -6.57%
• EPS Growth: N/A
• Country: UK
• Employees: 700
• Sector: Communication Services
• Sector Strength: 84
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 0.41
• Shares Outstanding: 39,478,535
• 10 Day Avg. Volume: 53,488
• 30 Day Avg. Volume: 37,924
• PEG Ratio: 0.03
• Price to Book (P/B): 0.89
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 1.79
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £300.00
• Price Target Upside: 50.00% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0

Frontier Developments' overall stock score reflects significant challenges in financial performance, particularly in profitability and revenue growth. While the company's balance sheet is stable, the technical analysis indicates bearish momentum, contributing to a cautious outlook. Despite an attractive P/E ratio suggesting undervaluation, the lack of dividend yield and operational challenges weigh on the stock's appeal.

Frontier Developments Business Overview & Revenue Model

Company Description

Frontier Developments plc develops and publishes video games for personal computers and videogame consoles in the United Kingdom. The company develops games across various platforms using its cross-platform technology, Cobra. It also publishes games developed by selected partner studios under its Frontier Foundry games label. The company was incorporated in 1994 and is headquartered in Cambridge, the United Kingdom.

How the Company Makes Money

Frontier Developments makes money primarily through the sale of its video games and downloadable content (DLC) directly to consumers across various gaming platforms, including PC and consoles. The company follows a model of developing both original IPs and licensed games which allows them to tap into established fan bases and new audiences. Revenue is generated from initial game sales, subsequent DLC expansions, and in-game purchases that enhance the gaming experience. Additionally, the company benefits from partnerships with major entertainment franchises, like their collaboration with Universal Pictures for the 'Jurassic World Evolution' series, which helps boost the visibility and appeal of their games.

Frontier Developments Financial Statement Overview

Summary

Frontier Developments faces substantial challenges in profitability, with declining revenues and negative net income impacting overall financial health. The balance sheet remains stable with low leverage, but cash flow issues from high capital expenditures raise concerns. A focus on cost management and revenue growth is crucial for future improvement.

Income Statement

The company has experienced a negative revenue growth rate of approximately -14.7% from 2023 to 2024, alongside a consistent decline in EBIT and Net Income, leading to negative margins. Despite a reasonable Gross Profit Margin of around 68.7% in 2024, the company struggles with high operating expenses, resulting in negative EBIT and Net Profit Margins, which indicates challenges in cost management and profitability.

Balance Sheet

The balance sheet shows a stable equity position with an equity ratio of approximately 65.4% in 2024, although the Return on Equity is negative due to negative net income. The debt-to-equity ratio remains manageable at around 0.28, indicating low leverage. Overall, the balance sheet reflects stability in equity but highlights profitability challenges.

Cash Flow

There is a significant decrease in free cash flow from 2023 to 2024, dropping by around 72.3%. The operating cash flow remains positive, with a high operating cash flow to net income ratio, indicating strong cash generation from operations. However, the negative free cash flow growth signifies increased challenges in sustaining capital expenditures.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
88.88M	89.27M	104.58M	114.03M	90.69M	76.09M
	Gross Profit
35.96M	61.32M	67.34M	73.61M	63.15M	51.56M
	EBIT
19.39M	-27.01M	-26.58M	1.54M	19.92M	16.62M
	EBITDA
34.74M	9.88M	14.86M	33.73M	38.08M	31.49M
	Net Income Common Stockholders
16.02M	-21.47M	-20.91M	9.63M	21.56M	15.89M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
27.24M	29.52M	28.31M	38.70M	42.42M	45.75M
	Total Assets
120.20M	117.39M	141.01M	169.58M	161.52M	147.91M
	Total Debt
20.41M	21.28M	19.28M	20.74M	22.16M	23.54M
	Net Debt
-6.83M	-8.24M	-9.03M	-17.96M	-20.27M	-22.22M
	Total Liabilities
37.83M	40.56M	45.04M	51.21M	48.37M	51.18M
	Stockholders Equity
82.37M	76.82M	95.97M	118.37M	113.15M	96.73M
Cash Flow		Free Cash Flow
40.78M	1.25M	4.49M	2.41M	6.08M	10.71M
	Operating Cash Flow
41.19M	32.46M	47.88M	41.16M	38.95M	32.41M
	Investing Cash Flow
-28.30M	-28.70M	-52.31M	-38.69M	-32.83M	-21.38M
	Financing Cash Flow
-2.76M	-2.51M	-6.02M	-6.17M	-9.47M	-640.00K

Frontier Developments Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 200.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:FDEV, the sentiment is Neutral. The current price of 200 is above the 20-day moving average (MA) of 192.37, below the 50-day MA of 200.60, and below the 200-day MA of 224.02, indicating a neutral trend. The MACD of -1.77 indicates Negative momentum. The RSI at 53.61 is Neutral, neither overbought nor oversold. The STOCH value of 79.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:FDEV.

Frontier Developments Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DEVO	65 Neutral	£97.27M	―	-3.77%	―	10.40%	53.88%
Sector *	60 Neutral	$14.07B	6.89	-3.35%	3.68%	2.42%	-36.25%
FDEV	53 Neutral	£77.23M	4.82	21.85%	―	-6.57%	―

Frontier Developments Corporate Events

Frontier Developments Awards Executive Share Options to Drive Long-Term Growth

Frontier Developments plc has granted a total of 538,000 options over Ordinary Shares to its four Executive Directors under the Long Term Incentive Plan. These options, which have a nominal exercise price of 0.5p per share, are set to vest in 2028, contingent on meeting specific revenue, profit, and shareholder return targets. This move is part of the company’s strategy to align executive incentives with long-term performance goals, potentially impacting its operational focus and shareholder value.