Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins, increase in stock price during the past year 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.
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Highlights from the ratings report include:
- 44.60% is the gross profit margin for CARNIVAL CORP/PLC (USA) which we consider to be strong. Regardless of CCL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CCL's net profit margin of 28.40% significantly outperformed against the industry.
- 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 0.23 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
- CCL, with its decline in revenue, slightly underperformed the industry average of 1.9%. Since the same quarter one year prior, revenues slightly dropped by 7.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
Carnival Corporation operates as a cruise and vacation company worldwide. Carnival has a market cap of $22.86 billion and is part of the services sector and leisure industry. The company has a P/E ratio of 21, above the S&P 500 P/E ratio of 17.7. Shares are up 17.8% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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