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Is it the Best Time to Buy Carnival Corporation for Robust Returns?

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Written by Timothy Sykes
Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

Amid bustling discussions of Carnival Corporation’s fleet revamp plans and promising summer booking trends, the company’s stock showed resilience. Notably, headlines highlighting cost-control measures and a rapid recovery in post-pandemic travel demand have caught investor attention. As a result, on Thursday, Carnival Corporation’s stocks have been trading up by 3.55 percent.

  • Mizuho raised the price target on Carnival to $25 from $22, maintaining an Outperform rating citing lower fuel prices, favorable currency movements, and strong yield growth as key drivers.
  • Stifel analyst Steven Wieczynski raised Carnival’s price target to $27 from $25, maintaining a Buy rating and predicting Carnival may raise its full-year guidance when they report on September 30.
  • Cruise line Cunard has announced its return to South America with up to five-day shore excursions surrounding its 78-night South America Discovery voyage.
  • Shares of cruise operators Norwegian Cruise Line Holdings (NCLH) and Carnival (CCL) rose 14% and 10%, respectively, as the consumer discretionary sector showed strength.
  • UBS expects an increase in Carnival’s fiscal Q3, Q4, and 2025 earnings estimates due to lower fuel prices and interest rates.

Candlestick Chart

Live Update at 16:01:59 EST: On Thursday, September 26, 2024 Carnival Corporation stock [NYSE: CCL] is trending up by 3.55%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Quick Overview of Carnival Corporation’s Recent Earnings

Carnival Corporation, one of the world’s leading cruise lines, recently presented a mix of encouraging and concerning financial metrics. The company reported a revenue of $21.59 billion, with a revenue per share of 19.23. Over the past three years, revenue growth has been marked at a striking 452.46%, demonstrating the company’s recovery momentum. Their EBIT margin stands at 10.1%, and the gross margin is an impressive 52%, suggesting solid operational effectiveness.

With a PE ratio of 26.14 and a significant enterprise value of $52.64 billion, emphasis needs to be placed on Carnival’s leverage, with a total debt to equity ratio of 4.75 and a quick ratio of 0.2. These figures indicate a highly leveraged company, requiring careful navigation through interest and debt management. The company’s recent cash flow report highlights a net income from continuing operations of $91 million, a sizable operating cash flow of $2.04 billion, but a free cash flow of $720 million, pointing towards significant capital expenditures.

On diving deeper into Carnival’s market movements, we unearthed revelations in their stock performance and financial health. Over September, the stock exhibited both peaks and troughs, driven by broader market sentiments and specific corporate announcements. Closing prices swung from mid-$16 to nearly topping $19.

Riding the High Tides with Carnival’s Rising Stock

This September unfolds like a thrilling maritime adventure for investors of Carnival Corporation. Mizuho’s upward revision of the price target to $25 from $22 underscores soaring optimism. Lower fuel prices and favorable currency conditions are the wind in Carnival’s sails, while strong yield growth and improving operating leverage are the sturdy hull that sees the ship cutting smoothly through the market waters.

Imagine steering through turbulent market seas; this is similar to Carnival’s management, fine-tuning their debt and yield balance. Fuel, the vital energy to this vessel, has become cheaper, mirroring calm tides that make the voyage economically compelling. UBS forecasts elevated Q3 and Q4 earnings, a lighthouse guiding the ship to more prosperous shores.

Stifel’s prediction of Carnival being in a prime position to elevate their full-year guidance on 30 September typifies anticipation and suspense. Carnival’s shares have rallied, yet further upside looms – it’s akin to a well-battered ship finding its bearings and setting forth on a fresh voyage with renewed vigor.

Amidst these rises, luxury cruise line Cunard’s announcement on South American excursions shines like beacon lights cutting through this bullish storm. This reaffirms Carnival’s initiative to cater to luxury travelers’ insatiable hunger for unforgettable, immersive experiences. Enhanced itineraries and novel travel propositions could very well adorn their sailing calendar, promising myriad offerings from Machu Picchu to Iguassu Falls.

More Breaking News

Financial Metrics: The Heartbeat of Carnival’s Operations

Dissecting Carnival’s financial metrics provides deeper insights into its operational pulse. Despite a pre-tax profit margin standing starkly at negative 39.3%, the gross margin of 52% reveals high-control over cost structures. This ratio tells the tale of a war room of fiscal resilience, fighting the grasps of widespread debt.

Carnival’s leverage ratio soars up to 7.7, reflecting significant reliance on borrowed funds but counterbalanced by a reassuring return on equity (ROE) at 15.12%. The ROE metric has historically acted as the compass for investors looking at underlying shareholder profitability and stands supportive of steady returns.

A snapshot of Carnival’s balance sheet highlights long-term debt positioned at $28.33 billion, paired cautiously with $16.46 billion in cash and cash equivalents. The gross tangible assets of $44.63 billion exhibit the sheer scale at which Carnival operates, an impressive figure akin to spotting a vast cruise ship from the harbor horizon.

Capital expenditure reported at $1.32 billion, catalyzes future-growing investments festooned within Carnival’s operational blueprint. Despite such heavy outlays, net income edged positively in their cash flow reporting. Their performance in fiscal quarters navigates through tempestuous market lanes to emerge with solid operational cash inflow.

The Best Time to Set Sail on Carnival Corporation?

Examining the outlook from market optimists Mizuho, Stifel, and UBS propels the narrative that Carnival is under steady hands, grasping favorable winds. Stifel’s raised target and anticipation of enhanced guidance signal robust management and anticipated milestones in profitability.

The dramatic ascent of share prices for Carnival and peer Norwegian Cruise Line Holdings (NCLH) by 10% and 14%, respectively, speaks volumes – it reflects market vigor, and nutrients derived from consumer discretionary strengths restored vigors. Akin to a vessel catching the ideal breeze, these advancements demarcate Carnival’s stride towards profitability with momentum.

Consider the resurgence of luxury voyages with Cunard, stoking allure and fresh enthusiasm amongst steadfast and new voyagers – this extends revenue streams, knitting broader customer experiences with lucrative propositions. Cunard’s strategic itinerary augmentations beacon extended consumer interest, like a ship unveiling hidden exotic ports that enfold mystery and grandeur.

Alluding to Carnival’s recent earnings, financial health, and broader market sentiments, the decision of acquiring shares demands a balanced discernment of potential rewards rigged against inherent risks. Investors might find the guided upward projections, stilled debt storms, and lucrative future-ready investments, as worthy navigational coordinates.

Finally, as Carnival Corporation plots its next course through the intricate blend of bullish market signals and strategic excursions, the prudent investor rides elevated on this slated optimistic guidance, aligning financial compasses towards promising, sunlit horizons. Can this momentum sustain and create a surge or will it ebb back? The maritime journey for Carnival and its investors promises a riveting unfolding.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”