Financial Comparison: Ship Finance International (SFL) vs. Frontline (FRO)
Ship Finance International (NYSE: SFL) and Frontline (NYSE:FRO) are both small-cap transportation companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, dividends, analyst recommendations, risk, institutional ownership, earnings and valuation.
Valuation & Earnings
This table compares Ship Finance International and Frontline’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Ship Finance International||$412.95 million||3.55||$146.40 million||$1.19||13.19|
|Frontline||$754.31 million||1.26||$117.01 million||$0.03||186.40|
Ship Finance International has higher revenue, but lower earnings than Frontline. Ship Finance International is trading at a lower price-to-earnings ratio than Frontline, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Ship Finance International has a beta of 1.4, suggesting that its stock price is 40% more volatile than the S&P 500. Comparatively, Frontline has a beta of 1.94, suggesting that its stock price is 94% more volatile than the S&P 500.
This table compares Ship Finance International and Frontline’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Ship Finance International||28.66%||10.97%||4.05%|
This is a summary of recent ratings and recommmendations for Ship Finance International and Frontline, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Ship Finance International||0||1||1||0||2.50|
Ship Finance International presently has a consensus target price of $15.00, indicating a potential downside of 4.46%. Frontline has a consensus target price of $6.00, indicating a potential upside of 7.33%. Given Frontline’s higher probable upside, analysts plainly believe Frontline is more favorable than Ship Finance International.
Ship Finance International pays an annual dividend of $1.40 per share and has a dividend yield of 8.9%. Frontline pays an annual dividend of $0.40 per share and has a dividend yield of 7.2%. Ship Finance International pays out 117.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Frontline pays out 1,333.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Frontline has increased its dividend for 5 consecutive years. Ship Finance International is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider and Institutional Ownership
27.0% of Ship Finance International shares are held by institutional investors. Comparatively, 12.5% of Frontline shares are held by institutional investors. 48.1% of Frontline shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Ship Finance International beats Frontline on 10 of the 16 factors compared between the two stocks.
Ship Finance International Company Profile
Ship Finance International Limited is a holding, and international ship owning and chartering company. The Company is engaged in the ownership and operation of vessels and offshore related assets, and also involved in the charter, purchase and sale of assets. Its assets consist of approximately 20 oil tankers, over 20 dry bulk carriers, approximately 20 container vessels, including a newbuilding, two car carriers, two jack-up drilling rigs, two ultra-deepwater drilling units, five offshore supply vessels, two chemical tankers and two newbuilding oil product tankers. Its oil tankers, chemical tankers and oil product tankers are all double-hull vessels. It has over nine asset types, including crude oil tankers, oil product tankers, chemical tankers, container vessels, car carriers, dry bulk carriers, jack-up drilling rigs, ultra-deepwater drilling units and offshore supply vessels. Its assets consist of a fleet of Suezmax tankers, crude carriers and oil/bulk/ore carriers.
Frontline Company Profile
Frontline Ltd. is a shipping company. The Company is engaged in the seaborne transportation of crude oil and oil products. Its tankers segment includes crude oil tankers and product tankers. As of December 31, 2016, the Company’s fleet consisted of 28 vessels owned by the Company (seven very large crude carriers (VLCCs), 10 Suezmax tankers and 11 Aframax/LR2 tankers); 13 vessels that are under capital leases (11 VLCCs and two Suezmax tankers); one VLCC that is recorded as an investment in finance lease; four vessels chartered-in for periods of 12 months, including extension options (two VLCCs and two Suezmax tankers); two VLCCs where cost/revenue is split equally with a third party (of which one is chartered-in by it and one by a third party); three medium range product tankers that are chartered-in on short term time charters with a remaining duration of less than two months, and five vessels that are under commercial management (two Suezmax tankers and three Aframax oil tankers).
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