Why Carnival Stock Might Be a Smart Long-Term Buy

Today at 7:32 AM ET, Carnival (NYSE:CCL) stock rose 3% to $17.27 in the pre-market session. The shares rallied due to more optimism about coronavirus vaccines and treatments. Also, investors liked the phase-in reopening of different economies.

Today, Carnival’s P&O cruises said that it’s extending its pause in operations until October 15 amid the COVID-19 pandemic. According to a MarketWatch report, “P&O Cruises President Paul Ludlow said the unit is still developing enhanced health and sanitation protocols, pre-boarding screening plans and how it will serve meals and drinks onboard. It is also working on crafting socially distanced entertainment and onshore activities as well as how crew and passengers interact with each other.” Carnival Cruise Lines will likely resume eight cruises starting August 1.

First-quarter performance

In the first quarter of fiscal 2020, which ended in February, Carnival delivered revenue of $4.8 billion—an increase of 2.5% YoY (year-over-year). Wall Street expected revenue of $4.68 billion. The company posted an adjusted EPS of $0.22, which missed the consensus estimate of $0.26.

Wall Street analysts expect Carnival to report EPS of -$1.54 on sales of $1.13 billion in the second quarter. Analysts expect the company’s sales to fall by 43.6% YoY in fiscal 2020 to $11.7 billion. The revenues could increase by 35.6% YoY in fiscal 2021 to $15.93 billion. The EPS will decline from $4.40 in fiscal 2019 to -$2.59 in fiscal 2020. They also expect an EPS of $0.03 in fiscal 2021.

Analysts’ target price for Carnival

Among the 19 analysts tracking Carnival stock, 68% recommended a “hold,” 21% recommended a “buy,” and 11% recommended a “sell.” Analysts’ mean target price for Carnival is $18.03, which implies a potential upside of 7.3% based on its last closing price.

Stock returns

On Monday, Carnival stock rose 6.7% and closed at $16.80 with a market cap of $12.3 billion. The stock has returned -67% in the last 12 months and 21% in the last month. The stock is trading 115.4% above its 52-week low of $7.80 and 68.8% below its 52-week high of $53.86.

On Monday, Carnival stock was trading 17.3% above its 20-day moving average of $14.32. Meanwhile, the stock is trading 26.6% above its 50-day moving average of $13.27 and 34.4% below its 100-day moving average of $25.60. The stock’s 14-day relative strength index score of 60 suggests that the stock isn’t oversold or overbought.

Carnival stock has a middle Bollinger Band level of $14.32, while its lower Bollinger Band level is $11.48. On Monday, Carnival stock closed near its upper Bollinger Band level of $17.15, which indicates that it’s overbought.

On Monday, Norwegian Cruise Line Holdings (NASDAQ:NCLH) and Royal Caribbean Cruises (NYSE:RCL) stocks returned 10.4% and 7.3%, respectively. In the first quarter of fiscal 2020, Norwegian Cruise Line delivered revenue of $1.25 billion—an increase of 11.2% YoY. Wall Street expected revenue of $1.25 billion. The company posted an adjusted EPS of -$0.99, which missed the consensus estimate of -$0.50. Read Can You Still Get a Piece of Norwegian Cruise Line Stock? to learn more.

At 8:19 AM ET today, the S&P 500 futures rose 0.38%, while the Dow futures rose 0.46%.

For more information about Carnival, read Buy Carnival Stock before It Makes Another Big Move.