Better Buy: Textainer Group Holdings Limited vs. Frontline Ltd.
While both Textainer Group Holdings Limited (NYSE: TGH) and Frontline (NYSE: FRO) operate in the shipping industry, these companies couldn't be more different. Textainer, for example, is one of the largest lessors of shipping containers. Frontline, on the other hand, operates one of the world's largest fleets of oil tankers. The differences in market focus tilt the scale toward Textainer at the moment given that market conditions in the container shipping industry are on the upswing.
One of the core differences between these two companies is how they make money. Textainer makes most of its money leasing containers to shipping companies under long-term contracts. As a result, the company generates relatively predictable lease rental income each quarter. So far this year, it has collected $216.4 million in revenue from these leases, which while down about 10% from last year has held up reasonably well considering the abysmal conditions in the shipping sector. Furthermore, it's worth noting that the market deteriorated to such a degree last year that one of the world's biggest shippers -- and a large customer of Textainer -- sank into bankruptcy. If it weren't for the impact of that bankruptcy, Textainer's revenue would have held up even better.
Image source: Getty Images.
Source: Fool.com
Frontline plc Stock
The community is currently still undecided about Frontline plc with 2 Buy predictions and 0 Sell predictions.
However, we have a potential of -3.21% for Frontline plc as the target price of 25 € is below the current price of 25.83 €.
