NEW YORK (
-- Carnival Corporation
) has been upgraded by TheStreet Ratings from hold to buy. 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 notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- CARNIVAL CORP/PLC (USA)'s earnings per share declined by 13.6% in the most recent quarter compared to the same quarter a year ago. 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 $2.47 versus $2.23 in the prior year. This year, the market expects an improvement in earnings ($2.61 versus $2.47).
- The current debt-to-equity ratio, 0.40, 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.
- Net operating cash flow has slightly increased to $412.00 million or 4.04% when compared to the same quarter last year. In addition, CARNIVAL CORP/PLC (USA) has also vastly surpassed the industry average cash flow growth rate of -73.77%.
- The revenue growth came in higher than the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 8.2%. 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.
Carnival Corporation operates as a cruise and vacation company in the United States and internationally. The company has a P/E ratio of 15.4, below the average leisure industry P/E ratio of 19.5 and below the S&P 500 P/E ratio of 16.7. Carnival has a market cap of $22.9 billion and is part of the
industry. Shares are down 17.6% year to date as of the close of trading on Monday.
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