Carnival Corporation (CUK) vs. Royal Caribbean Cruises (RCL) Head-To-Head Comparison

Royal Caribbean Cruises (NYSE: RCL) and Carnival Corporation (NYSE:CUK) are both large-cap consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, earnings, risk, dividends, institutional ownership, analyst recommendations and profitabiliy.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Royal Caribbean Cruises and Carnival Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Caribbean Cruises 1 2 14 0 2.76
Carnival Corporation 0 0 0 0 N/A

Royal Caribbean Cruises presently has a consensus target price of $101.68, indicating a potential downside of 6.62%. Given Royal Caribbean Cruises’ higher probable upside, equities research analysts clearly believe Royal Caribbean Cruises is more favorable than Carnival Corporation.

Earnings & Valuation

This table compares Royal Caribbean Cruises and Carnival Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Royal Caribbean Cruises $8.59 billion 2.73 $2.52 billion $6.47 16.83
Carnival Corporation $16.77 billion 2.85 $4.79 billion $3.76 17.58

Carnival Corporation has higher revenue and earnings than Royal Caribbean Cruises. Royal Caribbean Cruises is trading at a lower price-to-earnings ratio than Carnival Corporation, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Royal Caribbean Cruises has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500. Comparatively, Carnival Corporation has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500.

Profitability

This table compares Royal Caribbean Cruises and Carnival Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Royal Caribbean Cruises 16.29% 15.91% 6.30%
Carnival Corporation 16.48% 11.26% 6.52%

Institutional & Insider Ownership

71.1% of Royal Caribbean Cruises shares are held by institutional investors. Comparatively, 4.2% of Carnival Corporation shares are held by institutional investors. 15.3% of Royal Caribbean Cruises shares are held by company insiders. Comparatively, 0.0% of Carnival Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Royal Caribbean Cruises pays an annual dividend of $1.92 per share and has a dividend yield of 1.8%. Carnival Corporation pays an annual dividend of $1.60 per share and has a dividend yield of 2.4%. Royal Caribbean Cruises pays out 29.7% of its earnings in the form of a dividend. Carnival Corporation pays out 42.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Carnival Corporation has raised its dividend for 5 consecutive years. Carnival Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

About Royal Caribbean Cruises

Royal Caribbean Cruises Ltd. is a cruise company. The Company owns and operates three global cruise brands: Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises (Global Brands). The Company also own joint venture interest in the German brand TUI Cruises, interest in the Spanish brand Pullmantur and interest in the Chinese brand SkySea Cruises (collectively, Partner Brands). Together, its Global Brands and its Partner Brands operate a combined total of 49 ships in the cruise vacation industry with an aggregate capacity of approximately 123,270 berths as of December 31, 2016. As of December 31, 2016, the Company’s ships offer a selection of itineraries that call on approximately 535 destinations in 105 countries, covering all seven continents. Royal Caribbean International offers a range of itineraries to the destinations, including Alaska, Asia, Australia, Canada, the Caribbean, the Panama Canal and New Zealand with cruise lengths that range from 2 to 24 nights.

About Carnival Corporation

Carnival plc is a leisure travel company. The Company’s segments include North America, and Europe, Australia & Asia (EAA). Its North America segment includes Carnival Cruise Line, Princess Cruises (Princess), Holland America Line and Seabourn. Its EAA segment includes Costa Cruises (Costa), AIDA Cruises (AIDA), P&O Cruises (the United Kingdom), P&O Cruises (Australia) and Cunard. It also includes Cruise Support segment, which represents its portfolio of port destinations and private islands. In addition to its cruise operations, it owns Holland America Princess Alaska Tours, a tour company in Alaska and the Canadian Yukon. Its tour company owns and operates hotels, lodges, glass-domed railcars and motorcoaches. Its Carnival Cruise Line offers cruises generally from 3 to 8 days with almost all of its ships departing from 16 convenient United States home ports located along the East, Gulf and West coasts, Puerto Rico and Hawaii, as of November 30, 2016.

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