Long-established in the Travel & Leisure industry, Carnival Corp (CCL, Financial) has enjoyed a stellar reputation. It has recently witnessed a surge of 0.06%, juxtaposed with a three-month change of 42.32%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Carnival Corp.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 3/10
- 2. Profitability rank: 6/10
- 3. Growth rank: 1/10
- 4. GF Value rank: 4/10
- 5. Momentum rank: 6/10
Based on the above method, GuruFocus assigned Carnival Corp the GF Score of 63 out of 100, which signals poor future outperformance potential.
Company Snapshot: Carnival Corp
Carnival Corp, with a market cap of $20.37 billion, is the largest global cruise company, boasting 90 ships in service at the end of fiscal 2022. Its portfolio of brands includes Carnival Cruise Lines, Holland America, Princess Cruises, and Seabourn in North America; P&O Cruises and Cunard Line in the United Kingdom; Aida in Germany; Costa Cruises in Southern Europe; and P&O Cruises in Australia. Carnival also owns Holland America Princess Alaska Tours in Alaska and the Canadian Yukon. In 2019, prior to COVID-19, Carnival's brands attracted about 13 million guests, a level it should breach again in 2023.
Financial Strength Breakdown
Carnival Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0, indicating that the company is at loss. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Scoreis just 0.35, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years.
Growth Prospects
A lack of significant growth is another area where Carnival Corp seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -30% per year over the past three years, which underperforms worse than 87.76% of 768 companies in the Travel & Leisure industry. Stagnating revenues may pose concerns in a fast-evolving market.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Carnival Corp has a rich history and a strong brand portfolio, its financial health and growth prospects raise concerns about its ability to outperform in the future. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
