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Frontline (FRO) to Report Q2 Earnings: What's in the Offing?

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Frontline Ltd. (FRO - Free Report) is scheduled to release second-quarter 2020 results on Aug 27.

The company reported lower-than-expected earnings per share in the last two quarters.

Frontline Ltd. Price and EPS Surprise

Frontline Ltd. Price and EPS Surprise

Frontline Ltd. price-eps-surprise | Frontline Ltd. Quote

Moreover, the Zacks Consensus Estimate for second-quarter earnings has been stable at 98 cents over the past 60 days.

Against this backdrop, let’s delve into the factors that might have impacted the company’s June-quarter performance.

Frontline’s performance in the to-be-reported quarter is expected to have been affected by the coronavirus-induced supply-chain disruptions. In fact, woes related to this deadly disease are likely to have impacted second-quarter performance more severely than the March-quarter. This was because the entire three-month period (April to June) bore the brunt of this pandemic-borne crisis compared to only one month (March) in the last reported quarter.

Due to coronavirus-triggered challenges, multiple sailings were already canceled in the quarter. Moreover, vessels were rapidly idled. Consequently, operating revenues are likely to have decreased in the to-be-reported quarter.

We also expect the company’s performance to have been hurt by low tanker rates in the April-June period. Notably, oil prices rebounded in the second quarter from hitting the rock-bottom levels in the first quarter of this year. This, in turn, might have weakened the tanker rates.

However, reduced voyage operating expenses amid the coronavirus-led lower fleet utilization is likely to have boosted the bottom line in the to-be-reported quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Frontline this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But that is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Frontline has an Earnings ESP of 0.00% as the Most Accurate Estimate is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Frontline carries a Zacks Rank #3, currently.

Highlights of Q1 Earnings    

In the last reported quarter, the company’s earnings (excluding 7 cents from non-recurring items) of 91 cents missed the Zacks Consensus Estimate by a cent. However, the bottom line skyrocketed more than 100% year over year. Additionally, revenues of $288.5 million improved 21.1%.

Snapshots of Sectorial Releases

Below we present the second-quarter reports of three top-ranked companies in the Zacks Transportation sector.

United Parcel Service’s (UPS - Free Report) second-quarter 2020 earnings (excluding 10 cents from non-recurring items) per share of $2.13 surpassed the Zacks Consensus Estimate of $1.04. The bottom line also improved 8.7% year over year. Results were aided by expanded residential delivery volumes amid the continued pandemic situation, which confined people to their homes besides an increase in healthcare shipments and strong outbound demand from Asia.

UPS generated revenues worth $20,459 million in the quarter, outperforming the Zacks Consensus Estimate of $17,344.4 million. Moreover, the top line improved 13.4% on a year-over-year basis. The company sports a Zacks Rank #1, presently.

Canadian Pacific Railway Limited’s (CP - Free Report) second-quarter 2020 earnings (excluding 42 cents from non-recurring items) of $2.94 per share surpassed the Zacks Consensus Estimate of $2.75. However, quarterly earnings declined 8.4% year over year.

Quarterly revenues of $1,292.8 million lagged the Zacks Consensus Estimate of $1,299.9 million. The top line also fell 12.5% on a year-over-year basis due to depressed freight revenues. The company presently carries a Zacks Rank #2.

Werner Enterprises (WERN - Free Report) delivered second-quarter 2020 earnings per share (excluding 6 cents from non-recurring items) of 62 cents, which surpassed the Zacks Consensus Estimate of 40 cents. However, the bottom line dipped 1.6% year over year. Moreover, total revenues of $569 million missed the Zacks Consensus Estimate of $580.8 million and also dropped 9.3% year over year due to soft fuel surcharge and logistics revenues. The company has a Zacks Rank of 2, currently.

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