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Frontier Developments PLC (GB:FDEV)
LSE:FDEV

Frontier Developments (FDEV) AI Stock Analysis

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Frontier Developments

(LSE:FDEV)

53Neutral
Frontier Developments' overall stock score reflects significant challenges in financial performance, particularly in profitability and revenue growth. While the company's balance sheet is stable, the technical analysis indicates bearish momentum, contributing to a cautious outlook. Despite an attractive P/E ratio suggesting undervaluation, the lack of dividend yield and operational challenges weigh on the stock's appeal.

Frontier Developments (FDEV) vs. S&P 500 (SPY)

Frontier Developments Business Overview & Revenue Model

Company DescriptionFrontier Developments (FDEV) is a leading British video game developer known for creating engaging and immersive games across multiple platforms. Established in 1994 and headquartered in Cambridge, UK, the company operates in the interactive entertainment sector. Frontier Developments is renowned for its diverse portfolio of games, including popular titles like 'Elite Dangerous,' 'Planet Coaster,' and 'Jurassic World Evolution,' which are known for their quality and innovation.
How the Company Makes MoneyFrontier Developments makes money primarily through the sale of its video games and downloadable content (DLC) directly to consumers across various gaming platforms, including PC and consoles. The company follows a model of developing both original IPs and licensed games which allows them to tap into established fan bases and new audiences. Revenue is generated from initial game sales, subsequent DLC expansions, and in-game purchases that enhance the gaming experience. Additionally, the company benefits from partnerships with major entertainment franchises, like their collaboration with Universal Pictures for the 'Jurassic World Evolution' series, which helps boost the visibility and appeal of their games.

Frontier Developments Financial Statement Overview

Summary
Frontier Developments faces substantial challenges in profitability, with declining revenues and negative net income impacting overall financial health. The balance sheet remains stable with low leverage, but cash flow issues from high capital expenditures raise concerns. A focus on cost management and revenue growth is crucial for future improvement.
Income Statement
45
Neutral
The company has experienced a negative revenue growth rate of approximately -14.7% from 2023 to 2024, alongside a consistent decline in EBIT and Net Income, leading to negative margins. Despite a reasonable Gross Profit Margin of around 68.7% in 2024, the company struggles with high operating expenses, resulting in negative EBIT and Net Profit Margins, which indicates challenges in cost management and profitability.
Balance Sheet
60
Neutral
The balance sheet shows a stable equity position with an equity ratio of approximately 65.4% in 2024, although the Return on Equity is negative due to negative net income. The debt-to-equity ratio remains manageable at around 0.28, indicating low leverage. Overall, the balance sheet reflects stability in equity but highlights profitability challenges.
Cash Flow
55
Neutral
There is a significant decrease in free cash flow from 2023 to 2024, dropping by around 72.3%. The operating cash flow remains positive, with a high operating cash flow to net income ratio, indicating strong cash generation from operations. However, the negative free cash flow growth signifies increased challenges in sustaining capital expenditures.
Breakdown
TTMJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
88.88M89.27M104.58M114.03M90.69M76.09M
Gross Profit
35.96M61.32M67.34M73.61M63.15M51.56M
EBIT
19.39M-27.01M-26.58M1.54M19.92M16.62M
EBITDA
34.74M9.88M14.86M33.73M38.08M31.49M
Net Income Common Stockholders
16.02M-21.47M-20.91M9.63M21.56M15.89M
Balance SheetCash, Cash Equivalents and Short-Term Investments
27.24M29.52M28.31M38.70M42.42M45.75M
Total Assets
120.20M117.39M141.01M169.58M161.52M147.91M
Total Debt
20.41M21.28M19.28M20.74M22.16M23.54M
Net Debt
-6.83M-8.24M-9.03M-17.96M-20.27M-22.22M
Total Liabilities
37.83M40.56M45.04M51.21M48.37M51.18M
Stockholders Equity
82.37M76.82M95.97M118.37M113.15M96.73M
Cash FlowFree Cash Flow
40.78M1.25M4.49M2.41M6.08M10.71M
Operating Cash Flow
41.19M32.46M47.88M41.16M38.95M32.41M
Investing Cash Flow
-28.30M-28.70M-52.31M-38.69M-32.83M-21.38M
Financing Cash Flow
-2.76M-2.51M-6.02M-6.17M-9.47M-640.00K

Frontier Developments Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price195.60
Price Trends
50DMA
200.17
Negative
100DMA
203.40
Negative
200DMA
224.98
Negative
Market Momentum
MACD
-3.10
Negative
RSI
49.92
Neutral
STOCH
62.00
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:FDEV, the sentiment is Neutral. The current price of 195.6 is above the 20-day moving average (MA) of 192.41, below the 50-day MA of 200.17, and below the 200-day MA of 224.98, indicating a neutral trend. The MACD of -3.10 indicates Negative momentum. The RSI at 49.92 is Neutral, neither overbought nor oversold. The STOCH value of 62.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:FDEV.

Frontier Developments Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$391.15M19.688.03%4.71%
65
Neutral
£97.27M-3.77%10.40%53.88%
60
Neutral
$13.80B7.25-2.76%3.77%2.19%-42.55%
53
Neutral
£74.76M4.6721.85%-6.57%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GB:FDEV
Frontier Developments
195.60
-95.90
-32.90%
GB:EVPL
Team17 Group
274.00
4.00
1.48%
GB:DEVO
Devolver Digital, Inc.
20.50
-2.50
-10.87%

Frontier Developments Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Frontier Developments Awards Executive Share Options to Drive Long-Term Growth
Neutral
Feb 24, 2025

Frontier Developments plc has granted a total of 538,000 options over Ordinary Shares to its four Executive Directors under the Long Term Incentive Plan. These options, which have a nominal exercise price of 0.5p per share, are set to vest in 2028, contingent on meeting specific revenue, profit, and shareholder return targets. This move is part of the company’s strategy to align executive incentives with long-term performance goals, potentially impacting its operational focus and shareholder value.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.