It's been a great morning session for Carnival investors, who saw their shares rise 2.7% to a price of $23.44 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Carnival Is Overpriced:
Carnival Corporation & plc engages in the provision of leisure travel services in North America, Australia, Europe, Asia, and internationally. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.6 and an average price to book (P/B) ratio of 3.19. In contrast, Carnival has a trailing 12 month P/E ratio of 20.0 and a P/B ratio of 3.45.
Carnival has moved 32.2% over the last year compared to 23.4% for the S&P 500 — a difference of 8.8%. Carnival has a 52 week high of $24.66 and a 52 week low of $12.5.
The Company's Revenues Are Declining:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $18,881 | $20,825 | $5,595 | $1,908 | $12,168 | $21,593 |
| Operating Margins | 18% | 16% | -158% | -372% | -36% | 9% |
| Net Margins | 17% | 14% | -183% | -498% | -50% | 0% |
| Net Income (M) | $3,152 | $2,990 | -$10,236 | -$9,501 | -$6,093 | -$74 |
| Net Interest Expense (M) | -$194 | -$206 | -$895 | -$1,601 | -$1,609 | -$2,066 |
| Depreciation & Amort. (M) | $2,017 | $2,160 | $2,241 | $2,233 | $2,275 | $2,370 |
| Diluted Shares (M) | 744 | 719 | 710 | 932,669 | 1,171 | 1,300 |
| Earnings Per Share | $4.24 | $4.16 | -$14.41 | -$0.01 | -$5.2 | -$0.06 |
| EPS Growth | n/a | -1.89% | -446.39% | 99.93% | -51900.0% | 98.85% |
| Avg. Price | $57.93 | $46.41 | $18.52 | $21.29 | $15.79 | $23.47 |
| P/E Ratio | 13.66 | 11.16 | -1.29 | -2129.0 | -3.04 | -391.17 |
| CAPEX (M) | $3,749 | $5,429 | $3,620 | $3,607 | $4,940 | $3,284 |
| EV / EBITDA | 9.65 | 8.11 | -4.15 | -4093.5 | -23.2 | 13.56 |
| Total Debt (M) | $9,475 | $11,271 | $23,872 | $30,436 | $34,346 | $30,572 |
| Net Debt / EBITDA | 1.59 | 1.98 | -2.17 | -4.43 | -14.41 | 6.51 |
| Current Ratio | 1.41 | 1.29 | 6.06 | 5.26 | 3.13 | 2.52 |
Carnival's financial statements include several red flags such as slight revenue growth and decreasing reinvestment in the business, weak operating margins with a negative growth trend, and declining EPS growth. Additionally, the firm has a highly leveraged balance sheet. On the other hand, the company has an excellent current ratio of 2.52 working in its favor.
