Carnival Corporation (CCL) Is Charting a Turnaround Course

Indeed, Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) went public in January of this year and since then the share price has gained 12% compared to Carnival Corporation (NYSE:CCL)’s dismal performance of -11% and Royal Caribbean Cruises Ltd. (NYSE:RCL)’s 7% drop. Moreover, Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) has expanded EBITDA for 19 quarters in a row and has consistently improved customer satisfaction for the last 40 months. The company is taking delivery of new ships this year so the future looks bright. Analysts expect Norwegians income to expand 16% this year and 130% in 2014.

On the other hand…

The future does not look so bright for Royal Caribbean. Earnings estimates have been consistently revised downwards this year as the company faces stiff competition. Earnings were hit by one-off charges last year, falling 97% but are due to recover this year; although, they are still set to come in lower than 2011 when the company earned $2.77 per share. Earnings for this year are expected to touch $2.40 per share. Having said that, Royal Caribbean appears to be the cheapest in the sector, trading at a forward P/E of 11, whereas Carnival trades at 15 and Norwegian trades at round 30.

Foolish summary

All in all, as the biggest cruise company in the world, Carnival should be able to recover well but it will take awhile. On the other hand, both Norwegian and Royal Caribbean present a better thesis for investment. Royal Caribbean is the cheapest in the sector, while Norwegian is achieving the fastest rate of growth.

So, it would appear that whatever type of investor you are, the cruise sector presents an opportunity.

The article Carnival Is Charting a Turnaround Course originally appeared on Fool.com is written by Rupert Hargreaves.

Fool contributor Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Rupert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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