Frontier Group Holdings (ULCC) AI Stock Analysis

• Market Cap: $719.46M
• Dividend Yield: N/A
• Average Volume (3M): 4.08M
• Price to Earnings (P/E): 8.6
• Beta (1Y): 1.73
• Revenue Growth: 5.18%
• EPS Growth: N/A
• Country: US
• Employees: 7,913
• Sector: Industrials
• Sector Strength: 70
• Industry: Airlines, Airports & Air Services
• EPS (TTM): 0.37
• Shares Outstanding: 227,676,800
• 10 Day Avg. Volume: 6,095,877
• 30 Day Avg. Volume: 4,081,879
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.33
• Price to Cash Flow (P/CF): 3.60
• P/FCF Ratio: 4.30
• 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: $5.38
• Price Target Upside: 70.25% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 10

Frontier Group Holdings presents a mixed picture. Strengths include revenue growth and strategic initiatives highlighted in the earnings call. However, challenges such as low profitability margins, liquidity issues, and a bearish technical trend weigh on the overall score. The lowered Q1 2025 revenue guidance further adds to near-term uncertainties.

Positive Factors

Operational Performance

Frontier Airlines' operational initiatives, such as increasing its premium cabin capacity, pivoting onto more profitable routes and continuing to generate sale/leaseback gains, should support ongoing improvements in margins and earnings.

Revenue Generation

First class and unlimited companion passes are seen as long-term favorable changes for revenue generation, particularly after Spirit's bankruptcy.

Negative Factors

Cost Pressures

Frontier could see materially higher '26E labor costs as the carrier amends its contracts with pilots and others.

Financial Outlook

The airline is not expected to generate pre-tax profits in either FY25 or FY26.

Frontier Group Holdings Business Overview & Revenue Model

Company Description

Frontier Group Holdings, Inc., a low-fare airline company, provides air transportation for passengers. The company operates an airline that serves approximately 120 airports throughout the United States and international destinations in the Americas. It offers its services through direct distribution channels, including its website, mobile app, and call center. As of December 31, 2021, the company had a fleet of 110 Airbus single-aisle aircraft comprising, 16 A320ceos, 73 A320neos, and 21 A321ceos. Frontier Group Holdings, Inc. was incorporated in 2013 and is headquartered in Denver, Colorado.

How the Company Makes Money

Frontier Group Holdings makes money primarily through the sale of airline tickets, which is the core revenue stream. Additionally, the company generates significant revenue from ancillary services, including baggage fees, seat selection fees, onboard food and beverage sales, and other optional services that enhance the travel experience. Frontier's business model is centered around maintaining a low-cost structure by optimizing aircraft utilization, reducing operational expenses, and implementing a point-to-point route strategy that bypasses traditional hub-and-spoke systems. Strategic partnerships with third-party service providers and loyalty programs also contribute to its earnings by enhancing customer engagement and expanding service offerings.

Frontier Group Holdings Financial Statement Overview

Summary

Frontier Group Holdings demonstrates positive revenue growth and improved debt management, but low profitability margins and negative cash flow remain concerns.

Income Statement

Frontier Group Holdings has shown significant revenue growth over the years, particularly a 5.19% increase from 2023 to 2024. The gross profit margin improved drastically, indicating better cost management. However, the net profit margin remains low, reflecting persistent challenges in achieving profitability. The company shifted from a net loss in 2023 to a net income in 2024, which is a positive sign.

Balance Sheet

The balance sheet shows a strong recovery with zero debt in 2024, which substantially improves the debt-to-equity ratio. The equity ratio improved as well, showcasing a stronger capital structure. However, stockholder's equity remains relatively low compared to total assets, indicating room for strengthening financial stability.

Cash Flow

Frontier showed improvement in free cash flow from a significant negative value in 2023 to a less negative figure in 2024. Despite this, the operating cash flow to net income ratio is not available for 2024 due to zero operating cash flow, limiting insights into cash generation efficiency. Free cash flow remains negative, signaling potential liquidity challenges.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
3.77B	3.59B	3.33B	2.06B	1.25B
	Gross Profit
1.94B	302.00M	282.00M	-202.00M	-390.00M
	EBIT
58.00M	-3.00M	-35.00M	-117.00M	-365.00M
	EBITDA
122.00M	83.00M	3.00M	-99.00M	-327.00M
	Net Income Common Stockholders
85.00M	-11.00M	-37.00M	-102.00M	-225.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
740.00M	609.00M	761.00M	918.00M	378.00M
	Total Assets
6.15B	4.99B	4.50B	4.24B	3.55B
	Total Debt
4.47B	3.46B	2.93B	2.85B	2.61B
	Net Debt
3.73B	2.85B	2.17B	1.93B	2.23B
	Total Liabilities
5.55B	4.49B	3.99B	3.71B	3.24B
	Stockholders Equity
604.00M	507.00M	509.00M	530.00M	310.00M
Cash Flow		Free Cash Flow
-158.00M	-348.00M	-230.00M	153.00M	-573.00M
	Operating Cash Flow
-82.00M	-261.00M	-78.00M	216.00M	-557.00M
	Investing Cash Flow
-75.00M	-90.00M	-154.00M	-67.00M	11.00M
	Financing Cash Flow
288.00M	199.00M	75.00M	391.00M	156.00M

Frontier Group Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 3.16
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ULCC, the sentiment is Negative. The current price of 3.16 is below the 20-day moving average (MA) of 4.52, below the 50-day MA of 6.40, and below the 200-day MA of 5.71, indicating a bearish trend. The MACD of -0.86 indicates Positive momentum. The RSI at 27.81 is Positive, neither overbought nor oversold. The STOCH value of 21.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ULCC.

Frontier Group Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	62 Neutral	$7.70B	13.14	3.53%	3.32%	3.90%	-14.25%
ULCC	61 Neutral	$719.46M	8.57	15.12%	―	5.18%	―
SNCY	60 Neutral	$550.18M	10.82	9.75%	―	2.49%	-22.41%
VLRS	59 Neutral	$530.40M	4.15	41.49%	―	-3.62%	1459.83%
ALGT	50 Neutral	$852.91M	―	-19.93%	5.16%	0.11%	-311.73%
AZUL	47 Neutral	$227.16M	―	17.49%	―	-2.65%	-250.90%
JBLU	42 Neutral	$1.31B	―	-26.60%	―	-3.50%	-148.99%

Frontier Group Holdings Corporate Events

Frontier Group Holdings Lowers Q1 2025 Revenue Guidance

Frontier Group Holdings has updated its guidance for the first quarter of 2025, expecting a revenue growth of approximately five percent, which is lower than anticipated due to weakened demand in March. The company has responded by reducing scheduled capacity in the second quarter and focusing on maximizing liquidity through cost management. Preliminary results indicate a first-quarter adjusted pre-tax loss margin of about five percent and an adjusted net loss per share between $0.20 and $0.24. Total liquidity as of March 31, 2025, was approximately $885 million.

Spark’s Take on ULCC Stock

According to Spark, TipRanks’ AI Analyst, ULCC is a Neutral.

Frontier Group Holdings shows strengths in revenue growth and cost management, but faces challenges with profitability margins and cash flow generation. The stock price is in a bearish trend, and while valuation metrics are reasonable, the absence of a dividend yield may deter some investors. The earnings call provided a positive outlook with strategic improvements, contributing to the overall score.

To see Spark’s full report on ULCC stock, click here.

Frontier Group Revises Merger Proposal with Spirit Airlines

On February 11, 2025, Frontier Group Holdings, Inc. issued a revised proposal to merge with Spirit Airlines, which includes issuing $400 million in debt and 19% of Frontier’s equity to Spirit’s stakeholders. The proposal eliminates the necessity for Spirit to conduct a $350 million equity rights offering. Despite the revised offer, no agreement was reached, and Spirit plans to continue its standalone restructuring, indicating potential implications for stakeholders and the airline industry’s competitive landscape.

Frontier Group Proposes Merger with Spirit Airlines

On January 29, 2025, Spirit Airlines disclosed it received a proposal from Frontier Group Holdings for a potential merger, aiming to form a large-scale, low-fare airline. The proposal includes issuing $400 million in debt and 19% common equity to Spirit’s stakeholders, enhancing value compared to Spirit’s existing reorganization plan. However, no agreement has been reached, and the outcome remains uncertain, affecting the company’s future operations and stakeholder interests.