We think intelligent long term investing is the way to go. But along the way some stocks are going to perform badly. To wit, the Carnival Corporation & plc (NYSE:CCL) share price managed to fall 73% over five long years. That is extremely sub-optimal, to say the least. And we doubt long term believers are the only worried holders, since the stock price has declined 38% over the last twelve months. Even worse, it’s down 14% in about a month, which isn’t fun at all. But this could be related to poor market conditions — stocks are down 10% in the same time.
With the stock having lost 8.2% in the past week, it’s worth taking a look at business performance and seeing if there’s any red flags.
Because Carnival Corporation & made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over half a decade Carnival Corporation & reduced its trailing twelve month revenue by 28% for each year. That’s definitely a weaker result than most pre-profit companies report. So it’s not that strange that the share price dropped 12% per year in that period. We don’t think this is a particularly promising picture. Of course, the poor performance could mean the market has been too severe selling down. That can happen.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Carnival Corporation & is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So it makes a lot of sense to check out what analysts think Carnival Corporation & will earn in the future (free analyst consensus estimates)
What about the Total Shareholder Return (TSR)?
Investors should note that there’s a difference between Carnival Corporation &’s total shareholder return (TSR) and its share price change, which we’ve covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Carnival Corporation &’s TSR of was a loss of 70% for the 5 years. That wasn’t as bad as its share price return, because it has paid dividends.
A Different Perspective
We regret to report that Carnival Corporation & shareholders are down 38% for the year. Unfortunately, that’s worse than the broader market decline of 7.6%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 11% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It’s always interesting to track share price performance over the longer term. But to understand Carnival Corporation & better, we need to consider many other factors. Case in point: We’ve spotted 2 warning signs for Carnival Corporation & you should be aware of.
But note: Carnival Corporation & may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.