Things Look Grim For Carnival Corporation & Plc (NYSE:CCL) After Today's Downgrade
One thing we could say about Carnival Corporation & Plc (NYSE: CCL) analysts - they are not optimistic because they have just revised their short-term (legal) forecasts for the company. Forecasts for sales and earnings per share (EPS) went under the microscope, suggesting that analysts were putting a heavy burden on business.
After the last downgrade, Carnival Corporation's 15 analysts provided consensus estimates of $ 7.3 billion in sales in 2020, reflecting a significant 65% decline in sales over the past 12 months. After this downgrade, profits are now expected to fall into a loss-making area. The analysts forecast losses of $ 8.91 per share for 2020. Even before this consensus update, analysts forecast sales of $ 10 billion and losses of $ 10 billion per share in 2020. So, according to the latest consensus updates, there has been quite a change in views. The analysts have seriously cut their sales forecasts while expecting an increase in losses per share.
Check out our latest analysis for Carnival Corporation &
NYSE: CCL Past and Future Results June 20, 2020
The consensus price target fell 11% to $ 17.11, implicitly signaling that lower earnings per share is a leading indicator of Carnival Corporation's valuation. However, setting a single price target can be unwise because the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the different estimates to see if there are different opinions on the company's valuation. Currently, the most bullish analyst rates Carnival Corporation at $ 30.00 per share, while the most bearish one rates $ 5.00. As you can see, the range of estimates is wide, with the lowest rating less than half of the most bullish estimate, suggesting that there are some very different views on how this business will develop. As a result, it may not be possible to derive great importance from the consensus price target, which is after all only an average of this wide range of estimates.
Looking at the big picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates assume that sales are expected to slow with a forecast 65% drop in sales, a significant decrease from 6.4% annual growth over the past five years. In contrast, our data suggest that other companies (with analyst reporting) in the same industry are forecast to see annual revenue growth of 17% in the foreseeable future. It's pretty clear that Carnival Corporation &’s earnings are likely to do much worse than those of the broader industry.
The bottom line
The main thing with this downgrade is that the consensus has increased its forecast losses this year, suggesting that Carnival Corporation & may not be all right. Unfortunately, they have also downgraded their sales estimates, and the latest forecasts indicate that business will grow more slowly than the broader market. Given a serious cut in this year's expectations and a falling price target, we wouldn't be surprised if investors became suspicious of Carnival Corporation &.
Even worse, Carnival Corporation & is suffering from a significant debt burden that, if today's forecasts prove correct, could potentially exacerbate the downgrading of the forecast. See why we are concerned about Carnival Corporation's balance sheet by visiting our free risk dashboard on our platform here.
You can also see our analysis of the compensation and experience of Directors and CEOs of Carnival Corporation & whether insiders bought shares in companies.
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This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. We would like to provide you with a long-term, focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality materials. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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