The travel and tourism industry steadily recovered earlier this year, owing to solid progress on the vaccination front, declining COVID-19 case counts, and gradual lifting of the international travel ban. The industry also witnessed advanced travel and hotel bookings ahead of the holiday season. However, the recent discovery of the highly transmissible omicron variant in South Africa has resulted in the reimposition of travel restrictions, as COVID-19 cases rise globally despite increasing vaccination rates. As a result, the travel and tourism industry will likely suffer this holiday season.

Given this backdrop, overvalued travel stocks Carnival Corporation & plc (CCL), MakeMyTrip Limited (MMYT), Wheels Up Experience Inc. (UP), and Lindblad Expeditions Holdings, Inc. (LIND) are susceptible to pullbacks in the near term. So, they are best avoided now.

Carnival Corporation & plc (CCL)

CCL is a leisure travel company that offers cruise services and vacations. The company provides port destinations and other services and owns and operates hotels, lodges, glass-domed railcars, and motor coaches. It sells its cruises primarily through travel agents and tour operators.

For the fiscal third quarter ended August 31, 2021, CCL’s operating loss came in at 2.06 billion, indicating an 11.8% decline from the year-ago period. CCL’s adjusted net loss came in at $1.99 billion, up 16.9% from the prior-year period. Its adjusted loss per share decreased 20.1% year-over-year to $1.75. As of August 31, 2021, the company had $7.15 billion in cash and cash equivalents.

Analysts expect CCL’s EPS to remain negative in the current year and next year. Moreover, its EPS is expected to decline 61.3% year-over-year to $2.16 billion for the current year.

The stock has lost 27.8% over the past nine months and 17.9% over the past month. It closed Friday’s trading session at $19.28. In terms of forward EV/Sales, CCL is currently trading at 21.42x, 1352.7% higher than the 1.47x industry average. In terms of forward Price/Sales, CCL is currently trading at 10.08x, 734% higher than the industry average of 1.21x.

CCL’s weak prospects are reflected in its POWR Ratings. The stock has an overall rating of F, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

CCL has an F grade for Stability, Value, Quality, and Sentiment. To see additional POWR Ratings for CCL’s Growth and Momentum, click here. Of the four stocks in the F-rated Travel – Cruises industry, CCL is ranked last.

MakeMyTrip Limited (MMYT)

MMYT is an Indian-based online travel company that sells travel products and solutions internationally. The company operates through three segments ─ Air Ticketing; Hotels and Packages; and Bus Ticketing. It also provides ancillary travel requirements, such as visa processing and facilitating access to travel insurance. The company allows travelers to research, plan, book, and purchase travel services and products through its websites and other technology-enhanced distribution channels.

On November 1, 2021, Amazon Pay, Amazon.com, Inc.’s (AMZN) online payments processing service, and MMYT’s MakeMyTrip India subsidiary announced a long-term strategic partnership to offer travel services on Amazon.in. This partnership will enable MMYT to extend its distribution further via Amazon Pay’s large customer base, especially in smaller cities and towns, and accelerate online booking of travel services across the country.

MMYT’s pre-tax loss for its fiscal second quarter ended September 30, 2021, came in at $8.02 million, representing a 59.7% decline from the prior-year period. As of September 30, 2021, the company had $168.07 million in cash and cash equivalents.

Analysts expect MMYT’s EPS to remain negative for the current year. MMYT has lost 14.8% over the past nine months and 12.7% over the past month. It ended Friday’s trading session at $28.69. MMYT’s 6.70x forward EV/Sales is 354.4% higher than the 1.47x industry average. In terms of forward Price/Sales, MMYT is currently trading at 7.31x, 508.8% higher than the industry average of 1.20x.

MMYT’s POWR Ratings are consistent with this bleak outlook. MMYT has a D grade for Value and Stability. In addition to the POWR Rating grades I’ve highlighted, one can see MMYT’s ratings for Sentiment, Growth, Value, Momentum, and Quality here.

The stock is ranked #58 of 77 stocks in the F-rated Internet industry.

Wheels Up Experience Inc. (UP)

UP is a private aviation company that develops data and technology-driven solutions connecting consumers to safety-vetted and verified private aircraft. It also offers multi-tiered membership programs, on-demand flights across various private aircraft cabin categories, aircraft management, retail and wholesale charter, whole aircraft acquisitions and sales, corporate flight solutions, special missions, and commercial travel.

On July 22, 2021, UP and Abercrombie & Kent, the world’s leading luxury travel company, announced a strategic partnership to offer Wheels Up Members bespoke travel experiences utilizing the Wheels Up fleet in North America and private small group journeys in international destinations. This will enable UP to deliver a new standard in private luxury travel.

For its fiscal third quarter ended September 30, 2021, UP’s non-GAAP loss from operations came in at $37.57 million, representing a 65.2% rise from the prior-year period. Its non-GAAP net loss increased marginally to $28.45 million. Its loss per share came in at $0.25, compared to an EPS of $0.11 in the prior-year period. The company had $535.25 million in cash and cash equivalents as of September 30, 2021.

UP has lost 60.6% over the past nine months and 28.1% over the past month. It closed Friday’s trading session at $4.20. In terms of trailing-12-month Price/Cash Flow, UP is currently trading at 19.91x, 26.2% higher than the industry average of 15.78x.

UP’s POWR Ratings reflect this bleak outlook. The stock has an overall rating of D, equating to a Sell. UP also has a D grade for Growth, Stability, and Momentum. Click here to see the additional ratings for UP (Value, Quality, and Sentiment).

UP is ranked #26 of 31 stocks in the F-rated Airlines industry.

Lindblad Expeditions Holdings, Inc. (LIND)

LIND provides expedition cruising and adventure travel experiences under the Lindblad and Natural Habitat brands. The company operates through two segments ─ Lindblad and Land Experiences. It offers its services through expeditions.com and nathab.com websites. It also has a strategic alliance with the National Geographic Society.

On October 19, 2021, LIND acquired an 80% stake in Classic Journeys, LLC, a leading luxury cultural walking tour company. This acquisition further broadens LIND’s platform of high-quality experiential product offerings in robust adventure travel sectors, including the cultural walking tour market. LIND is looking forward to capitalizing on the growing demand for authentic and immersive adventure travel and wellness globally.

For the fiscal third quarter ended September 30, 2021, LIND’s operating loss decreased 34.2% year-over-year to $17.65 million. While its net loss decreased 7.6% year-over-year to $25.68 million, its loss per share decreased 10.7% to $0.50. The company had $155.56 million in cash and cash equivalents as of September 30, 2021.

Analysts expect LIND’s EPS to remain negative in the current year and next year. The stock has lost 17.2% over the past nine months and 2.4% over the past month. It ended Friday’s trading session at $16.51.

LIND’s 9.41x trailing-12-month EV/Sales is 538.3% higher than the 1.47x industry average. In terms of forward Price/Sales, LIND is currently trading at 5.90x, 391.3% higher than the industry average of 1.20x.

It’s no surprise that LIND has an overall F grade, which equates to Strong Sell in our POWR Ratings system. LIND has an F grade for Value and Sentiment and a D grade for Quality. Click here to see additional POWR Ratings for LIND’s Growth, Momentum, and Stability.

CCL shares were trading at $18.50 per share on Monday afternoon, down $0.78 (-4.05%). Year-to-date, CCL has declined -14.59%, versus a 26.46% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...

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