Carnival Corporation Stock Downgraded (CCL)

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 ( TheStreet) -- Carnival Corporation (NYSE: CCL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

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Highlights from the ratings report include:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for CARNIVAL CORP/PLC (USA) is currently lower than what is desirable, coming in at 28.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.59% significantly trails the industry average.
  • Net operating cash flow has decreased to $523.00 million or 30.26% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
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Carnival Corporation operates as a cruise and vacation company worldwide. The company operates in two segments, North America; and Europe, Australia, and Asia. The company has a P/E ratio of 21.3, above the S&P 500 P/E ratio of 17.7. Carnival has a market cap of $21.11 billion and is part of the services sector and leisure industry. Shares are down 3.9% year to date as of the close of trading on Wednesday.

You can view the full Carnival Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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