NEW YORK (TheStreet) -- Carnival (CCL) - Get Report stock is declining by 2.51% to $50.10 on heavy trading volume on Tuesday afternoon, after the company announced a $1 billion share repurchase program.
The Miami-based cruise vacation company started repurchasing shares during the fiscal 2015 third quarter and has continued to do so in the fiscal 2015 fourth quarter, the company said today.
Carnival will enter into a 10B-5 program to repurchase stock during its regularly scheduled close periods, Carnival said.
So far today, 4.3 million shares of Carnival have traded, versus its 30-day average of 3.64 million shares.
Separately, TheStreet Ratings team rates CARNIVAL CORP/PLC (USA) as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
We rate CARNIVAL CORP/PLC (USA) (CCL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 49.01% is the gross profit margin for CARNIVAL CORP/PLC (USA) which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.90% is above that of the industry average.
- Net operating cash flow has increased to $1,281.00 million or 14.37% 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 6.87%.
- CARNIVAL CORP/PLC (USA)' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CARNIVAL CORP/PLC (USA) increased its bottom line by earning $1.57 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $1.57).
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The current debt-to-equity ratio, 0.32, 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 0.15 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
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.