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For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Carnival plc (LON:CCL) useful as an attempt to give more color around how Carnival is currently performing.
How Well Did CCL Perform?
CCL’s trailing twelve-month earnings (from 28 February 2019) of US$3.1b has jumped 17% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 22%, indicating the rate at which CCL is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s going on with margins and whether the rest of the industry is feeling the heat.
In terms of returns from investment, Carnival has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 7.5% exceeds the GB Hospitality industry of 5.9%, indicating Carnival has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Carnival’s debt level, has increased over the past 3 years from 6.5% to 9.7%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Carnival gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Carnival to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CCL’s future growth? Take a look at our free research report of analyst consensus for CCL’s outlook.
- Financial Health: Are CCL’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 28 February 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.