Shares of Frontier Group Holdings (ULCC, Financial) rose by 17.64% recently, buoyed by reports that Spirit Airlines (SAVE) might file for bankruptcy. This potential restructuring could benefit Frontier as the market anticipates possible sales of Spirit's assets, providing an opportunity for competitors like Frontier and JetBlue Airways (JBLU), which also saw a significant stock price increase.
Frontier Group Holdings, operating as an ultra-low-cost carrier, is currently priced at USD 5.87. Despite this recent surge, its stock faces several challenges. The company displays poor financial strength, primarily due to significant debt levels. Frontier's current Price-to-Book (P/B) ratio is 2.53, and its Altman Z-score stands at 0.59, indicating financial distress and a heightened risk of bankruptcy over the next two years.
Despite these challenges, investor interest may be swayed by Frontier's GF Value evaluation. The stock is currently labeled as a "Possible Value Trap," with a GF Value of USD 12.07. For a deeper dive into the evaluation, you can visit the GF Value page for Frontier Group Holdings.
On the operational front, Frontier has a Piotroski F-Score of zero, suggesting subpar business operations. Additionally, the company reported a negative Earnings Per Share (EPS) of -0.29 over the trailing twelve months, reflecting financial struggles. The market capitalization of Frontier is estimated at approximately USD 1.318 billion, reflecting its position within the small-cap segment of airlines.
Overall, while the stock's immediate price movement may be promising due to external industry factors, potential investors should exercise caution given Frontier Group Holdings' financial vulnerabilities and high debt level. The recent hike in its stock price does not alleviate these underlying issues, and thorough analysis is recommended for anyone considering an investment in ULCC.
