Frontier Developments Share Discussion Threads

[hydrus] 17/9/2017 19:43

If you post an 'analysis' you have to be prepared for comments and not get defensive about it. Anyway best of luck.

[cfro] 17/9/2017 17:53

Hydrus,

I am sorry my analysis did not live up to your expectations. I am waiting for your comparative analysis of two, shall we say, more similar companies with great anticipation..

[phowdo] 17/9/2017 10:27

Eidos is a bit of a lazy comparison, but perhaps an easy one to draw for someone with superficial sector knowledge.

It would be more instructive to compare Frontier to the likes of say Bioware, Maxis, Bullfrog/Lionhead, Bethesda, Traveller Tales, Blizzard etc. Large developers that became specialised in their respective genres.
You could compare to Jez San's Argonaut that was also listed on the LSE many moons ago but that would only highlight how Frontier has successfully shifted away from the traditional publisher developer business model where the publisher held most of the cards.

Eidos was a disaster from the top down - long story short they lucked out by stumbling on a huge hit fairly early in the companies life through a fortuitous acquisition. They then squandered that wealth over the next 8 years before being taken over by a tiny rival.

If David Braben had anything in common with the likes of Charles Cornwall I wouldn't be invested here.

[panic investor] 16/9/2017 20:27

Makw - read it too - awful knowledge

[m4ybe] 16/9/2017 18:59

about 98% approval rating for yesterday's Thargoid battle trailer

[makw61] 16/9/2017 14:41

I wonder if the move to SETS has brought a few high-frequency traders to the party? They typically run momentum based algo's so we may expect those to increase the size of up and down swings. Difficult to trade against them, and they have a nasty habit of cancelling orders so liquidity may not be what it seems at times, but good for long term holders. Embrace the volatility - if vol was zero it would be impossible to make any money!

Just got round to reading the IC and the Editor's section was about FDEV. He made a comparison with EIDOS which was a bit apples and pears for me. Digital distribution has dramatically increased the longevity of franchises so not quite the risks of old imo. Also, extrapolating from a sample of one is generally frowned upon in statistical circles.

GLA

[panic investor] 16/9/2017 12:13

Talking of which one of FDEV partners reports Tuesday KWS :-)

[m4ybe] 16/9/2017 12:08

FDEV has been generally outperforming FEVR the past year and although I have some of each I would expect that to continue.

[nurdin] 16/9/2017 12:01

It is just a comparison between two momentum stocks with above average PEs imo

[hydrus] 16/9/2017 11:52

That's a really poor piece of analysis. The companies operate in totally different markets with completely different types of products. You've made no attempt to compare their positions in their respective markets. Funnily enough you don't even mention what FEVR sell......sums it up for me.

[cfro] 16/9/2017 11:44

Below is a quick and ready comparison of FDEV and FEVR:

FEVR: Last full results showed increase in Revenue of 73% and profit margins of 55.2%. EPS came in at 23.7.

Historic Per = 96.
Market Cap = £2.6bn
Share sales by key directors have been heavy and substantial.
Future prospects: Already established positions in UK and Europe. US started making headways. ROW flat growth over short term. Ambition to break into China.


FDEV: Increase in revenues of 75%, profit margins of 21%. EPS of 22.7.

Historic Per = 43.
Market Cap = £330m
No share sales by key CEO who holds 45%. Substantial share buying by non-exec directors.
Future prospects: Two major games already selling well in many countries. New Jurassic World franchise. Target China with Tencent as key partner.

I will let other investors make their own minds as to which of the two they believe is not only cheaper on fundamentals but also holds the greater sales potential.

[allstar4eva] 16/9/2017 07:52

Add to the fact that a moderately successful JWE would see closer to 70-90p eps in 2019 not to mention the Tencent effect on china sales for all franchises....

[m4ybe] 16/9/2017 07:48

I think the risk to expectations for the next year may be to the upside, if they keep ED and PC going with publicity seeking events, which they seem to be rather good at.

[m4ybe] 16/9/2017 07:41

Thargoids are coming in just over one trading week, Tuesday 26th September. The shoot up alien fest should attract new players.

I think the relatively short period of stockmarket listing may distract from the decades long growth story since the 1980s really.

I work in a small software company with lumpy earnings, and it's worrying when there are a number of very quiet months in a row, so I know how many investors will feel. But the decades history always brings sales back with growth, and in this case we even know how that will happen and how well it will be received pre-release so there's no risk that I can see.

[allstar4eva] 16/9/2017 07:33

m4ybe - I agree. I have called sentiment on this one very badly and wish I sold higher up but have no plans to sell at all (unless the story changes). I do not think FDEV is overvalued at all for the forecast growth on offer.

For example BOO is set to double revenues increase profits over 2 years in a similar manner to FDEV yet trades on a 2019 pe of 70. Apply that to FDEV and you get an share price of £23 quid (33.4*70) - and it is worth noting that the 33.4 eps in 2019 is very conservative for FDEV. Also FDEV margins appear to be double those of BOO. Different companies but it shows what the market is prepared to pay for high growth in some cases.

The key issue for some investors may be the lumpy earnings with negative growth forecast for next year. That is no doubt an issue however I am looking at things from a forward perspective over a two year period comparing like for like with companies on a similar growth forecast over the period and seeing FDEV coming out very well. The 2019 pe ratio is now 29. Of course nothing to stop it going lower but I think it represents very, very good value here.

[m4ybe] 16/9/2017 07:10

I find shares tend to get priced for expectations over the next 4 to 5 years. On that basis (50% annual compounded growth effectively since the 1990s, with plenty more likely) I would want much higher than we have had so far to let any of mine go.

[aledger1] 16/9/2017 06:25

The share is under pressure from heavy profit taking and whilst there is huge growth potential long term the share is expensive short term by any means. Depends on your investment strategy. Ive top sliced on the spike down to 1100 and am out for now until I can see some stabilisation and the clear support. Hard to value atm and that is causing volatility. If you're a lth and happy to tuck it away and forget about it then I'm sure a good investment but if a share tanks more then 10% then I like move my money elsewhere. Will def keep an on eye on this one.

[m4ybe] 16/9/2017 04:33

Monday FDEV in the AIM indices, and no longer short term overbought. Neutral daily RSI has been support since the low in 2016.

[nimbo1] 15/9/2017 23:05

I/C view - in the long run we'll be pleased we bought the volatility I am sure!

What a difference a year has made for Frontier Developments (FDEV). The first half of 2016 saw shares sell off after the launch of an expansion to its flagship game, Elite Dangerous: Horizons, was delayed by eight weeks. A year on and what is billed as a "multiplayer space epic" has been a major contributor to the group’s stellar performance in the first half of 2017, while the launch of a new game, Planet Coaster, contributed an estimated £20m to the top line.

FDEV:LSE
Frontier Developments PLC

1mth
Today change
-9.15% Price (GBP)
963.00
As expected, operating expenditures ticked up slightly, but at a slower rate to revenues, meaning sales, marketing and administrative expenses are now just 32 per cent of sales, from 37 per cent in last year's first half. These improved margins and sent operating profit up from £1.2m to £7.8m – comfortably ahead of previous expectations.

Frontier is in the process of expanding its headcount, meaning profits are expected to drop again in the year to May 2018. Broker FinnCap is forecasting adjusted pre-tax profits and EPS of £1.3m and 3.3p (FY2017: £9.8m and 28.3p). But by the 2019 financial year, Frontier will have completed the development of its new game franchise, Jurassic World, which is expected to generate £35m of sales in its first year on the shelves.

FRONTIER DEVELOPMENTS (FDEV)
ORD PRICE: 1,208p MARKET VALUE: £ 413m
TOUCH: 1200-1215p 12-MONTH HIGH: 1,218p LOW: 170p
DIVIDEND YIELD: NIL PE RATIO: 53
NET ASSET VALUE: 91.5p* NET CASH: £12.6m
Year to 31 May Turnover (£m) Pre-tax profit (£m) Earnings per share (p) Dividend per share (p)
2013 12.1 1.07 4.2 nil
2014 9.5 -1.71 -5.8 nil
2015 22.8 1.62 4.9 nil
2016 21.4 1.28 4.2 nil
2017 37.4 7.81 22.7 nil
% change +75 +513 +440 -
Ex-div: na
Payment: na
*Includes intangible assets of £21.9m, or 64p a share
IC View

With the shares up more than 600 per cent in the past year but earnings expected to fall in 2018, Frontier’s near-term valuation is currently eye watering for new investors. That said, the growth potential in this third gaming franchise creates an excellent long-term outlook for holders. Hold.
Last IC view: Buy, 843p, 21 Aug 2017

[panic investor] 15/9/2017 19:28

Sells from earlier in the week perhaps - the last to know will be us lot

[archnye46] 15/9/2017 18:59

Dodgy dodgy dealings

[cfro] 15/9/2017 18:25

Do my eyes deceive me or is that a trade for 10k at £12.50p?

[m4ybe] 15/9/2017 17:00

The tickets have all sold out well in advance.

[nimbo1] 15/9/2017 15:05

FYI, even in the steep falls today HL were offering stock in volume. Most of the time they don't weirdly.

The expo should focus the mind in a few weeks time. hxxps://expo.frontier.co.uk

[cfro] 15/9/2017 13:41

Its funny how this fall has happened ever since it went onto SETS. Very difficult before that to buy or sell any quantity.