Carnival Corporation & plc (CCL) is scheduled to release its fiscal fourth quarter financial results on December 21. Wall Street anticipates the company to report a loss per share of $0.13 for the quarter. Meanwhile, the company is expected to generate $5.28 billion in revenue, indicating a 37.5% year-over-year rise.

On December 18, CCL's Carnival Cruise Line unveiled its ambitious plans for growth, epitomized by the launch of Carnival Jubilee. The flagship promises a paradigm shift in onboard offerings, focusing on enriching experiences tailored for children, tweens, teens, and their families.

These initiatives would position CCL at the forefront of the cruise industry's evolution, promising enhanced experiences for discerning passengers.

On October 10, the company announced that Grand Bahama Shipyard Ltd., in which CCL holds a substantial stake, is undergoing a $600 million expansion. The transformative initiative is set to establish the shipyard as the world's largest cruise ship repair facility, underlining CCL's commitment to operational excellence and growth.

This expansion not only fortifies CCL's operational capabilities but also positions the cruise line for sustained success in a dynamically evolving maritime industry.

Furthermore, investor confidence in CCL has increased with the insider purchase of 450,000 shares in the past three months. Furthermore, 23 open market buys occurred in the last 12 months, totaling 1,584,468 shares purchased. Shares of CCL have gained 26.7% over the past month and 134.8% year-to-date to close the last trading session at $18.71.

Here are the financial aspects of CCL that could influence its performance in the near term:

Mixed Financials

For the third quarter that ended August 31, 2023, CCL’s revenues increased 59.2% year-over-year to $6.85 billion. Its net income and EPS came in at $1.07 billion and $0.79, respectively, compared to a net loss and loss per share of $770 million and $0.65 in the previous year’s period.

However, as of August 31, 2023, the company’s cash and cash equivalents amounted to $2.84 billion, compared to $4.03 billion as of November 30, 2022. Moreover, its current assets stood at $4.68 billion, down from $7.49 billion as of November 30, 2022.

Mixed Growth Record

Over the past five years, CCL’s revenue increased at a CAGR of 1.4%. In addition, its total assets grew at a CAGR of 3.6%. However, the company’s EBITDA declined at a CAGR of 10% over the same time frame.

Mixed Analyst Estimates

The consensus revenue estimate of $21.50 billion for the fiscal year that ended November 2023 reflects a 76.7% year-over-year improvement. However, for the same period, the company is expected to report a loss per share of $0.06.

In addition, the company’s revenue for the next fiscal year (ending November 2024) is estimated to come in at $24.31 billion, up 13.1% from the previous year, while EPS is expected to stand at $0.92.

Mixed Valuation

In terms of forward EV/Sales, CCL is trading at 2.45x, 96.8% higher than the industry average of 1.25x. Its forward EV/EBITDA of 12.69x is 26% higher than the 10.08x industry average. However, the stock’s forward Price/Cash Flow of 7.59x is 22.3% lower than the 9.77x industry average.

Mixed Profitability

The stock’s trailing-12-month gross profit margin of 47.41% is 33.7% higher than the industry average of 35.47%. Its trailing-12-month EBITDA margin of 15.99% is 46.5% higher than the 10.91% industry average. However, the stock’s trailing-12-month asset turnover ratio of 0.39x is 60.3% lower than the industry average of 0.99x.

POWR Ratings

CCL’s outlook is apparent in its POWR Ratings. The stock has an overall rating of C, which translates to Neutral in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. CCL has a C grade for Quality, which is in sync with its moderate profitability. In addition, the stock has a C grade for Value, consistent with its mixed valuation.

CCL is ranked #3 in the 4-stock Travel - Cruises industry. Click here to access CCL’s Growth, Momentum, Stability, and Sentiment ratings.

Bottom Line

The company is charting a course for long-term growth through ambitious plans such as the Carnival Jubilee launch, offering enriched experiences. Additionally, the $600 million expansion of Grand Bahama Shipyard underscores CCL's commitment to operational excellence. 

Yet, given the company's varied financials, mixed valuation, moderate profitability, and divergent analyst estimates, it suggests awaiting a more opportune entry point in CCL.

How Does Carnival Corporation & plc (CCL) Stack Up Against Its Peers?

While CCL has an overall grade of C, equating to a Neutral rating, you may check out these other A (Strong Buy) and B (Buy) stocks within the Travel - Hotels/Resorts industry: Genting Berhad (GEBHY), Atour Lifestyle Holdings Limited (ATAT), and Bluegreen Vacations Holding Corporation (BVH). To explore more Travel - Hotels/Resorts stocks, click here.

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CCL shares were trading at $18.56 per share on Wednesday morning, down $0.15 (-0.80%). Year-to-date, CCL has gained 130.27%, versus a 26.13% rise in the benchmark S&P 500 index during the same period.

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

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