RCL - Carnival: Stock Has Run Ahead Of Expected Income Improvements (Rating Downgrade)

2024-03-20 00:38:00 ET

Summary

• After a runaway price rise in 2023, Carnival Corporation's stock is down by 14% year-to-date, which is explained by its elevated P/E compared to peers.
• The company's financial performance still looks good, though. Its bookings are strong for 2024, and the company expects a return to net profits this year as well.
• However, the forward non-GAAP P/E, indicated by its projected net income, is higher than its other cruise peers and also the consumer discretionary sector.

Since I last wrote about the cruise operator Carnival Corporation ([[CCL]], [[CUK]]) in December last year, the exceptional price rise in 2023 has petered out. On the contrary, it has actually seen a small 3.6% decline since. The stock's year-to-date [YTD] fall at the time of writing is even sharper at over 14% (see chart below)....

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