On 28 February 2019, Carnival plc (LON:CCL) announced its earnings update. Overall, analysts seem cautiously bearish, with earnings expected to grow by 5.1% in the upcoming year against the higher past 5-year average growth rate of 22%. Currently with trailing-twelve-month earnings of US$3.2b, we can expect this to reach US$3.3b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Carnival in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Carnival perform in the near future?
The longer term expectations from the 7 analysts of CCL is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of CCL's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 14% based on the most recent earnings level of US$3.2b to the final forecast of US$4.5b by 2022. EPS reaches $6.54 in the final year of forecast compared to the current $4.45 EPS today. Margins are currently sitting at 17%, which is expected to expand to 20% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Carnival, I've put together three important factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Carnival worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Carnival is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Carnival? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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.