Carnival Corporation (CCL): Is This Company A Prime Destination for Investors?

Page 1 of 2

The largest cruise company in the world, Carnival Corporation (NYSE:CCL), is trading 9.98% lower from where it started in 2013, a rarity in this bull market.

Carnival Corporation (NYSE:CCL)

The company operates about 100 cruise ships and tour companies in Alaska and Canada. Based on market capitalization, Carnival Corporation (NYSE:CCL) is valued at $26.73 billion, and the stock carries a price to book ratio of 1.13. Currently, the company carries a TTM profit margin of 9.58%.

With Carnival Corporation (NYSE:CCL) trading at nearly half of its all time-highs, is the company a bargain in this inflated market, or should investors look for a different company to set sail on?

Strengths:

Historic Revenue Growth:
In 2003, Carnival Corporation (NYSE:CCL) reported revenue of $6.71 billion; in 2012, the company announced revenue of $15.38 billion, representing year over year annual growth of 9.65%, a strong trend that should continue into the future, with projections placing 2015 revenue at $18.35 billion. This growth has been a result of multiple mergers and a rapidly growing fleet.

Institutional Vote of Confidence: 79% of shares outstanding are held by institutional investors, representing over $17 billion in investment, displaying the confidence some of largest investors in the world have in the company and its future.
Leading Industry Position: Carnival is more than double the size of its biggest competitor, operates 100 ships with an estimated capacity of over 200,000 passengers, and employs 85,400 people.  With this leading market position and established nature comes a greater level of security and predictability for investors.
Reasonable Valuation: At the moment, the company carries a price to earnings ratio of 17.49, a price to book ratio of 1.13, and a price to sales ratio of 1.68; all of which indicate a company trading with fairly reasonable valuations.
Cash Flow Position: In 2012, Carnival Corporation (NYSE:CCL) generated $2.82 billion in cash flow, allowing the company to pay out its dividend yielding 3.02%
Weaknesses:

Net Debt: The company’s $465 million in cash and cash equivalents is outweighed by its $7.16 billion debt load, resulting in a net debt of $6.69 billion, accounting for 23.44% of market capitalization, a major financial weakness of the company.
Margin Contraction: Over the past decade, Carnival Corporation (NYSE:CCL)’s TTM profit margin has gradually declined, representing a substantial weakening in the company’s profitability.

Opportunities:

Dividend Growth: Since implementing their dividend program in 1988, Carnival has consistently raised their dividend payouts, and is widely anticipated to do so into the future.

Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

The 20 Biggest Contracts in MLB History

The 7 Worst Blown Calls in Sports History

7 Free Ways to Advertise Your Business Online

The 18 Best R&B Songs of the 90’s

The 10 Most Dangerous States to be a Cop

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!