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Examining Carnival plc's (LON:CCL) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CCL's latest performance announced on 31 May 2019 and weigh these figures against its longer term trend and industry movements.
Did CCL's recent earnings growth beat the long-term trend and the industry?
CCL's trailing twelve-month earnings (from 31 May 2019) of US$3.0b has increased by 5.7% 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 20%, indicating the rate at which CCL is growing has slowed down. To understand what's happening, let’s take a look at what’s occurring with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Carnival has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 7.1% exceeds the GB Hospitality industry of 5.3%, 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 7.7% to 9.5%.
What does this mean?
Carnival's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Carnival has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research Carnival to get a better picture 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 31 May 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 email@example.com. 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.