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Is Carnival (CCL) Stock Undervalued Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Carnival (CCL) is a stock many investors are watching right now. CCL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 10.95, which compares to its industry's average of 20.33. Over the past year, CCL's Forward P/E has been as high as 12.18 and as low as 9, with a median of 10.66.

CCL is also sporting a PEG ratio of 1.26. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CCL's PEG compares to its industry's average PEG of 1.73. Over the past 52 weeks, CCL's PEG has been as high as 1.31 and as low as 0.77, with a median of 1.02.

Another valuation metric that we should highlight is CCL's P/B ratio of 1.04. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.32. Within the past 52 weeks, CCL's P/B has been as high as 1.27 and as low as 0.84, with a median of 1.03.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CCL has a P/S ratio of 1.28. This compares to its industry's average P/S of 1.35.

Finally, investors will want to recognize that CCL has a P/CF ratio of 6.77. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 9.15. Over the past year, CCL's P/CF has been as high as 7.96 and as low as 5.36, with a median of 6.63.

These are just a handful of the figures considered in Carnival's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CCL is an impressive value stock right now.

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