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After Carnival Corporation's (NYSE:CCL) earnings announcement on 28 February 2019, the consensus outlook from analysts appear somewhat bearish, as a 3.2% rise in profits is expected in the upcoming year, relative to the higher past 5-year average growth rate of 22%. With trailing-twelve-month net income at current levels of US$3.2b, we should see this rise to US$3.3b in 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. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Exciting times ahead?
The longer term expectations from the 17 analysts of CCL is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for CCL, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 10% based on the most recent earnings level of US$3.2b to the final forecast of US$4.2b by 2022. This leads to an EPS of $6.2 in the final year of projections relative to the current EPS of $4.45. Margins are currently sitting at 17%, which is expected to expand to 18% 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 aspects 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 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.