Why Jim Cramer Likes Carnival (CCL) Stock

NEW YORK (TheStreet) -- Carnival  (CCL) reported a 34% earnings increase in its quarterly report Tuesday and raised its outlook for the fiscal year. Earnings per share totaled $1.58, which beat analysts' expectations of $1.44.

TheStreet's Jim Cramer said he likes the quarter partly because fuel prices are down. He also points out that Carnival stockholders get a $200 credit for on-board spending on Carnival Cruise ships. On-board spending was up in the latest quarter, and Cramer also liked the company's numbers in Asia. Carnival's European numbers have also turned in the right direction.

Cramer notes the consolidation in the cruise industry with Royal Caribbean International  (RCL) , Norwegian Cruise Line  (NCLH) and Carnival, and calls the industry "terrific." He says Carnival has caught up with its peer companies and puts a $50 price target on the stock.

 

Watch the video below for a closer look at Carnival's latest quarterly results:

TheStreet Ratings team also rates Carnival 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 a number of strengths, 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, increase in net income 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."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CCL's revenue growth has slightly outpaced the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 158.5% when compared to the same quarter one year prior, rising from $41.00 million to $106.00 million.
  • Net operating cash flow has slightly increased to $1,196.00 million or 3.37% when compared to the same quarter last year. In addition, CARNIVAL CORP/PLC (USA) has also modestly surpassed the industry average cash flow growth rate of -5.08%.
  • The current debt-to-equity ratio, 0.39, 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.
  • You can view the full analysis from the report here: CCL Ratings Report

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