Nordic American Tanker Ltd (NAT), Teekay Corporation (TK): Why Frontline Ltd (FRO) Earnings Disappointed Investors

One question still facing Frontline: what impact unrest in the Middle East might have. So far, Egyptian turmoil hasn’t led to closures of the Suez Canal or its affiliated pipelines. But if such closures were to occur, it could boost demand for shipping by tanker as an alternative, with the longer route around the Cape of Good Hope potentially boosting revenue.

The biggest takeaway from the Frontline earnings report is the fact that daily charter rates have continued to fall, both for its very large crude carriers and for its Suezmax tankers. In particular, with the company calling for itself and other industry players to scrap older tankers in order to cut capacity and hopefully raise prices, it’s evident that Frontline is trying to move forward aggressively to support tanker prices. Nevertheless, with no signs of imminent improvement in the tanker industry, Frontline is running out of time to begin making money again.

The article Why Frontline Earnings Disappointed Investors originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.

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