NEW YORK (TheStreet) -- Shares of Carnival (CCL) - Get Report were gaining 1.3% to $45 after-hours Thursday after the cruise line announced new shipbuilding contracts that will add nine new cruise ships to its fleet between 2019 and 2022.
Carnival signed agreements with Italian shipbuilder Fincantieri and German shipbuilder Meyer Werft to build new next-generation cruise ships for the fleet. The shipbuilding agreements with both companies include options for additional ships "in the coming years."
The new cruise ships will be the most efficient ships in Carnival's history, according to the company. The ships will serve North America, Europe, and newer markets such as China.
"We're excited to take this next step in our fleet enhancement plan with these two new agreements that are consistent with our long-term strategy of measured capacity growth over time," Carnival President and CEO Arnold Donald said. "Our goal as a company is to exceed the expectations of every guest on every ship every day, and these new ships will further enable us to do just that.
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 several positive factors, 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, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these 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:
- CCL's revenue growth has slightly outpaced the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 1.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $637.00 million or 34.10% when compared to the same quarter last year. Despite an increase in cash flow, CARNIVAL CORP/PLC (USA)'s average is still marginally south of the industry average growth rate of 40.33%.
- The current debt-to-equity ratio, 0.37, 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 0.12 is very weak and demonstrates a lack of ability to pay short-term obligations.
- 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.
- You can view the full analysis from the report here: CCL Ratings Report