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TheStreet Open House

Why Carnival (CCL) Stock Is Sinking This Morning

NEW YORK (TheStreet) -- Shares of Carnival Corp.  (CCL) are down -0.40% to $37.50 after Jefferies said its latest pricing data is weaker than in recent months, and it's worried about close-in pricing for 2015.

Jefferies reiterated its "underperform" recommendation and $33 price target for Carnival, but added that it continues to prefer "buy" rated Royal Caribbean (RCL), with a price target of $58.

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Separately, TheStreet Ratings team rates CARNIVAL CORP/PLC (USA) as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CARNIVAL CORP/PLC (USA) (CCL) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 158.5% when compared to the same quarter one year prior, rising from $41.00 million to $106.00 million.
  • Net operating cash flow has slightly increased to $1,196.00 million or 3.37% when compared to the same quarter last year. In addition, CARNIVAL CORP/PLC (USA) has also modestly surpassed the industry average cash flow growth rate of -3.37%.
  • The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.13 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • You can view the full analysis from the report here: CCL Ratings Report
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