Royal Caribbean Cruises Ltd. (RCL), Carnival Corporation (CCL): An Industry On Sale!

Royal Caribbean is expected to perform similarly, however their earnings are not expected to drop this year since their mishaps have been relatively minor when compared to Carnival. Despite this fact, shares have dropped in a similar manner to Carnival, effectively punishing Royal Caribbean for Carnival’s misfortune. Royal Caribbean earned $1.97 last year and is projected to grow their earnings to $3.89 by fiscal year 2016, for earnings growth of over 97% in three years! Compare their projected earnings and their current share prices and Royal Caribbean is looking like the better deal already.

At first glance, Norwegian may seem to trade at a premium. With earnings of $0.97 per share last year, the stock trades at a P/E of about 32.4. However, Norwegian is projected to have the most rapid 3-year earnings growth of the three companies, at over 170%, with $2.65 per share projected in 2015.

Conclusion

Surprisingly, of the major cruise ship companies, Carnival does not seem to be the most deeply discounted at the moment. Royal Caribbean looks to be the best value of the group based on projected earnings growth relative to the current share price. That said; don’t count Norwegian out of the running just yet because shares look a bit pricy. If there new ship, and the few to follow (they have several more breakaway and breakaway-plus class ships on order) are truly game changers, it’s anyone’s guess just how much market share they could capture over the next decade and beyond.

Regardless of which you choose, this entire industry seems to be on sale due to the unfortunate incidents that have occurred lately and the uncertainty they have created. If people continue to embrace cruises as low-cost, high-value vacation choices, it’s hard to go wrong with any of the three!

The article An Industry On Sale! originally appeared on Fool.com and is written by Matthew Frankel.

Matthew 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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