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GuruFocus has detected 4 Warning Signs with Carnival Corp $CCL.
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Carnival Corp (NYSE:CCL)
Operating Margin %
15.17% (As of Nov. 2016)

Operating margin is calculated as operating income divided by its revenue. Carnival Corp's operating income for the three months ended in Nov. 2016 was $597 Mil. Carnival Corp's revenue for the three months ended in Nov. 2016 was $3,935 Mil. Therefore, Carnival Corp's operating margin for the quarter that ended in Nov. 2016 was 15.17%.

Good Sign:

Carnival Corp operating margin is expanding. Margin expansion is usually a good sign.

CCL' s Operating Margin % Range Over the Past 10 Years
Min: 8.6   Max: 20.91
Current: 18.74

8.6
20.91
CCL's Operating Margin % is ranked higher than
78% of the 796 Companies
in the Global Leisure industry.

( Industry Median: 7.65 vs. CCL: 18.74 )

Carnival Corp's 5-Year Average operating margin Growth Rate was 8.70% per year.

Carnival Corp's operating income for the three months ended in Nov. 2016 was $597 Mil. Its operating income for the trailing twelve months (TTM) ended in Nov. 2016 was $3,071 Mil.


Definition

Operating margin - also known as operating income margin, operating profit margin and return on sales (ROS) - is the ratio of Operating Income divided by net sales or Revenue, usually presented in percent.

Carnival Corp's Operating Margin for the fiscal year that ended in Nov. 2016 is calculated as

Operating Margin=Operating Income (A: Nov. 2016 ) / Revenue (A: Nov. 2016 )
=3071 / 16389
=18.74 %

Carnival Corp's Operating Margin for the quarter that ended in Nov. 2016 is calculated as

Operating Margin=Operating Income (Q: Nov. 2016 ) / Revenue (Q: Nov. 2016 )
=597 / 3935
=15.17 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

Just like Gross Margin, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions. Peter Lynch prefers those with higher margins than those with lower margins.


Be Aware

Compared with a company’s EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company’s revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)’s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia’s Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus’s Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.


Related Terms

Gross Margin, Operating Income, Revenue, Cost of Goods Sold, Selling, General, & Admin. Expense (SGA), Research & Development, Depreciation, Depletion and Amortization


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Carnival Corp Annual Data

Nov07Nov08Nov09Nov10Nov11Nov12Nov13Nov14Nov15Nov16
Operating Margin 20.9118.6316.0016.2214.2810.678.6011.1616.3818.74

Carnival Corp Quarterly Data

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
Operating Margin 26.127.157.538.0530.9213.7411.8912.9030.6515.17
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