Carnival (CCL) Stock Gains Following Easing of U.S.,Cuba Tensions

NEW YORK (TheStreet) -- Carnival (CCL) shares are up 3.15% to $44.48 in trading on Wednesday as the cruise line gained after the U.S. government said it was moving to normalize diplomatic relations with Cuba.

President Obama held a press conference today saying that he instructed Secretary of State John Kerry to immediately begin discussions to reestablish relations with the country while also announcing plans to open an embassy there.

Investors are looking forward to Carnival and other cruise lines offering Cuban destinations now that it looks like the travel restrictions to the country will be lifted soon.

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"In addition, the U.S. will ease restrictions on remittances, travel and banking relations, and Cuba will release 53 Cuban prisoners identified as political prisoners by the U.S. government. Although the decades-old American embargo on Cuba will remain in place for now, the administration signaled that it would welcome a move by Congress to ease or lift it should lawmakers choose to," according to the New York Times.

TheStreet Ratings team rates CARNIVAL CORP/PLC (USA) as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CARNIVAL CORP/PLC (USA) (CCL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, attractive valuation levels, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

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

  • The revenue growth came in higher than the industry average of 9.3%. Since the same quarter one year prior, revenues slightly increased by 4.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • 44.33% is the gross profit margin for CARNIVAL CORP/PLC (USA) which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.20% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $1,120.00 million or 39.47% 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 -17.67%.
  • You can view the full analysis from the report here: CCL Ratings Report
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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