A Look At Frontier Group Holdings (ULCC) Valuation As Cash Burn And Debt Raise Dilution Concerns

Recent commentary on Frontier Group Holdings (ULCC) is focusing on weak growth in revenue passenger miles, ongoing free cash flow deficits tied to reinvestment, and a sizeable debt load that could raise dilution risk if new capital is required.

See our latest analysis for Frontier Group Holdings.

At a share price of $4.99, Frontier has a 90 day share price return of 29.27%. However, the 1 year total shareholder return of a 41.50% decline shows that recent momentum is rebuilding from a weaker longer term experience.

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With a share price of US$4.99, a recent 90 day gain of 29.27%, a 1 year total return decline of 41.50% and a value score of 3, the key question is whether Frontier is now cheap or if the market is already factoring in future growth.

Most Popular Narrative: 11.9% Undervalued

With Frontier Group Holdings trading at $4.99 against a most followed fair value estimate of $5.67, the current price sits below that narrative anchor and puts the focus on what would need to go right for the gap to close.

The expansion of premium product offerings (e.g., first-class seating, UpFront Plus), increased loyalty cardholder engagement, and enhanced ancillary service monetization are driving higher non-fare revenue per passenger, supporting both top-line growth and margin expansion over the medium term.

Read the complete narrative.

Curious what has to happen for that fair value to make sense? Revenue growth expectations, margin rebuild and a rerated earnings multiple all sit at the core of this narrative.

Result: Fair Value of $5.67 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there is still meaningful risk that continued leisure travel volatility and higher non fuel costs could pressure margins and challenge the case for a rerating.

Find out about the key risks to this Frontier Group Holdings narrative.

Build Your Own Frontier Group Holdings Narrative

If you are not fully on board with this view, or simply prefer to work through the numbers yourself, you can build a tailored Frontier Group Holdings story in just a few minutes, starting with Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Frontier Group Holdings.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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