Do You Own These 2 Cruise Ship Stocks? Sell Them Now

NYSE: CCL | Carnival Corporation  News, Ratings, and Charts

CCL – Due to high inflation, rising interest rates, increased borrowing costs, and recession fears, cruise shipping companies are struggling to keep themselves afloat. Given their weak fundamentals, Carnival Corporation (CCL) and Royal Caribbean Cruises (RCL) are not well-positioned to survive the challenging macroeconomic environment, so we think these stocks are best avoided now. Read on…

The cruise shipping industry was severely affected by the COVID-19 pandemic, and many companies in this space had to increase their debt burden to tide over the halt of operations. Despite the high pent-up demand and easing of travel restrictions, rising inflation, higher fuel costs, and a potential recession will likely dampen the industry’s growth.

Increased borrowing costs due to the rising interest rates further exacerbate these headwinds. Therefore, despite the rise in occupancy levels, cruise liners’ return to profitability could be hindered.

It could be wise to avoid prominent cruise shipping stocks Carnival Corporation & plc (CCL) and Royal Caribbean Cruises Ltd. (RCL), given their poor fundamentals and growth prospects.

Carnival Corporation & plc (CCL)

CCL operates as a leisure travel company. It owns and operates hotels, lodges, glass-domed railcars, and motor coaches and offers port destinations and other services. The company operates in the United States, Canada, Continental Europe, the United Kingdom, Australia, New Zealand, Asia, and internationally.

On August 17, 2022, CCL announced an extension of the maturity of its outstanding 5.75% Convertible Senior Notes due 2023 to October 2024 as a part of privately negotiated exchange agreements with select holders. This reflects the company’s weak debt profile.

For its fiscal second quarter ended May 31, 2022, CCL’s operating loss and net loss came in at $1.47 billion and $1.83 billion, narrowing 8.8% and 11.5%, respectively, from the year-ago period. The company’s loss per share came in at $1.61, down 12% from the prior-year period. Also, its adjusted EBITDA loss narrowed 9.3% year-over-year to $928 million.

Street expects its EPS for the quarter ending August 31, 2022, to remain negative. The stock has slumped 57.5% over the past year to close the last trading session at $9.97.

CCL’s POWR Ratings are consistent with this bleak outlook. It has an overall rating of D, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has an F grade for Stability and Sentiment and a D for Value and Quality. Within the F-rated Travel – Cruises industry, it is ranked #3 out of 4 stocks. To see the other ratings of CCL for Growth and Momentum, click here.

Royal Caribbean Cruises Ltd. (RCL)

RCL is a cruise company that owns and operates three global cruise vacation brands: Royal Caribbean International, Celebrity Cruises, and Silversea Cruises, comprising a range of itineraries to various destinations. It is an end-to-end travel service provider, and its offerings include pre and post-hotel stay arrangements and air transportation.

On August 15, 2022, RCL announced the pricing of upsized $1.25 billion convertible senior notes offering due 2027 to refinance near-term debt maturities. This will increase the company’s total debt and interest burden.

RCL’s total cruise operating expenses for the fiscal second quarter ended June 30, 2022, increased 298% year-over-year to $1.69 billion. Its operating loss narrowed 78.6% from the year-ago value to $218.64 million. The company’s adjusted net loss came in at $530 million, narrowing 58.8% from the year-ago period, while adjusted loss per share came in at $2.08, down 58.9% from the year-ago period.

Analysts expect RCL’s EPS to remain negative for fiscal 2022. Over the past six months, the stock has lost 49.5% to close the last trading session at $42.30.

RCL’s weak fundamentals are reflected in its POWR Ratings. It has an overall rating of D, equating to a Sell in our proprietary rating system.

It has an F grade for Stability and a D for Value, Sentiment, and Quality. It is ranked #2 in the same industry. Click here to see the other ratings of RCL for Growth and Momentum.

CCL shares were trading at $9.95 per share on Monday afternoon, down $0.02 (-0.20%). Year-to-date, CCL has declined -50.55%, versus a -14.17% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CCLGet RatingGet RatingGet Rating
RCLGet RatingGet RatingGet Rating

Most Popular Stories on

How Low Could Stocks Go?

The S&P 500 (SPY) is starting to test key support levels for the first time since November 2023 given continuing signs that Fed rate cuts are getting pushed further and further into the future. This begs the question of “how low could stocks go?” 44 year investment veteran Steve Reitmeister does his level best to answer that question including a trading plan and top picks to stay one step ahead of the market. Read on below for the full story...

Software Stock Watchlist - Should You Buy, Sell, or Hold?

Rapid growth in the software sector is fueled by increasing digitalization, growing cloud adoption, integration of AI and ML capabilities into software products, and rising cyber threats. So, let’s analyze whether you should buy, hold, or sell software stocks The Sage Group (SGPYY), Qualys (QLYS), and Blackbaud (BLKB). Read more to find out...

Bank of America (BAC) Braces for Earnings - Strategies for Investors

Bank of America (BAC), the second-largest U.S. lender, will publish its first-quarter earnings on April 16. With the bank’s net interest income expected to decline in the first quarter, should investors consider investing in the stock ahead of its earnings? Read on to learn my view...

4 Bullish Airliner Stocks to Consider - Buy or Watch?

The airline industry is well-poised for continued growth thanks to surging passenger and air cargo demand amid rapid urbanization, globalization, and economic expansion. So, should you buy or watch airline stocks SkyWest (SKYW), International Consolidated Airlines (ICAGY), Controladora Vuela (VLRS), and Air Canada (ACDVF)? Read on…

Updated 2024 Stock Market Outlook

The bull market continues to rage on with the S&P 500 (SPY) making new highs. That is the past...the question is what does the future hold? That is why 44 year investment veteran Steve Reitmeister provides this updated 2024 Stock Market Outlook to help you carve a path to outperformance the rest of the year. Read on below for the full story...

Read More Stories

More Carnival Corporation (CCL) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CCL News