Carnival Corporation Stock Downgraded (CCL)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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, good cash flow from operations and increase in stock price during the past year. 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:
  • Net operating cash flow has increased to $477.00 million or 19.54% 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 -30.93%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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 company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 140.5% when compared to the same quarter one year ago, falling from $37.00 million to -$15.00 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, CARNIVAL CORP/PLC (USA)'s return on equity significantly trails that of both the industry average and the S&P 500.

Carnival Corporation operates as a cruise company worldwide. It operates in two segments, North America; and Europe, Australia, & Asia. Carnival has a market cap of $21.46 billion and is part of the services sector and leisure industry. Shares are down 9% year to date as of the close of trading on Thursday.

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

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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