Tumbling to a price of $25.08 during today's afternoon trading session, shares of Carnival are now -13.97% below their average target price of $29.15. Does this mean the stock will reverse course? Analysts are giving CCL an average rating of buy and target prices ranging from 14.0 to 35.0 dollars per share.
We can use Carnival's short interest as a proxy for determining general market sentiment regarding the stock. The short interest is the percentage of the share float that represents short positions, meaning that the investor believes the stock will decline in the future. Since CCL's short interest is 7.3%, the market sentiment is mixed on this stock.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
Another way to gauge the sentiment on Carnival is to look at the percentage of institutions that are invested in the stock. In this case, 62.2% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
Overall, there is positive market sentiment towards Carnival because of an analyst consensus of some upside potential, a buy rating, an average amount of shares sold short, and an average number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about CCL:
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It has trailing 12 month earnings per share (EPS) of $1.44 per share
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Carnival has a trailing 12 month Price to Earnings (P/E) ratio of 17.4 while the S&P 500 average is 29.3
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The company has a Price to Book (P/B) ratio of 3.7 in contrast to the S&P 500's average ratio of 4.74
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Carnival is a Consumer Discretionary company, and the sector average P/E and P/B ratios are 22.6 and 3.19 respectively
