Carnival Corporation (CCL): Cruising For a Bruising

But investors should be wary of dipping their toes into Royal Caribbean. Shares carry a very lofty and sea sickening P/E of 473.20. Net income is deteriorating, debt risk is growing and return on equity has been uninspiring. The company has warned that increased fuel and cruise costs, coupled with currency exchanges, will keep near term gains modest. Also to keep gains in check is the slight down-tick in cruise ship occupancy that the cruise line has been experiencing.

Norwegian Cruise Lines looks like a better bet for market participants. The company just reported its first earnings release since going public in January, and handily beat the consensus estimate of a penny, reporting earnings per share of 4 cents. Year-over-year, the company earned 97 cents per share, a 36% increase. It was the company’s 18th consecutive quarter of year-over year growth. The company is focused on improving fuel usage, which accounts for a big chunk of its cash. It is also increasing its fleet, and says 2013 is a turning point for the company. Right now it appears Norwegian is steered in the right direction.

Meanwhile, Carnival is headed on a different path. Shares are certainly cruising for a bruising.

The article Cruising For a Bruising originally appeared on Fool.com and is written by Diane Alter.

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