Comparing Carnival (CCL) and Teekay Tankers (TNK)

Carnival (NYSE: CCL) and Teekay Tankers (NYSE:TNK) are both consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, risk, profitability and valuation.

Profitability

This table compares Carnival and Teekay Tankers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Carnival 14.73% 11.97% 7.01%
Teekay Tankers -13.78% -2.16% -1.05%

Earnings and Valuation

This table compares Carnival and Teekay Tankers’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Carnival $17.51 billion 2.01 $2.61 billion $3.82 17.25
Teekay Tankers $431.18 million 0.49 -$58.02 million ($0.11) -10.82

Carnival has higher revenue and earnings than Teekay Tankers. Teekay Tankers is trading at a lower price-to-earnings ratio than Carnival, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

76.7% of Carnival shares are held by institutional investors. Comparatively, 47.7% of Teekay Tankers shares are held by institutional investors. 23.8% of Carnival shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and price targets for Carnival and Teekay Tankers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Carnival 0 6 15 0 2.71
Teekay Tankers 1 2 2 0 2.20

Carnival presently has a consensus price target of $74.89, indicating a potential upside of 13.68%. Teekay Tankers has a consensus price target of $1.65, indicating a potential upside of 38.66%. Given Teekay Tankers’ higher possible upside, analysts plainly believe Teekay Tankers is more favorable than Carnival.

Volatility and Risk

Carnival has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500. Comparatively, Teekay Tankers has a beta of 2.02, indicating that its share price is 102% more volatile than the S&P 500.

Dividends

Carnival pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Teekay Tankers pays an annual dividend of $0.12 per share and has a dividend yield of 10.1%. Carnival pays out 20.9% of its earnings in the form of a dividend. Teekay Tankers pays out -109.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Carnival has increased its dividend for 3 consecutive years. Teekay Tankers is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Carnival beats Teekay Tankers on 13 of the 17 factors compared between the two stocks.

About Carnival

Carnival Corporation is a leisure travel company. The Company is a cruise company of global cruise guests, and a provider of vacations to all cruise destinations throughout the world. The Company operates in four segments: North America, EAA, Cruise Support and, Tour and Other. The Company’s North America segment includes Carnival Cruise Line, Holland America Line, Princess Cruises (Princess) and Seabourn. The Company’s Cruise Support segment represents certain of its port and related facilities and other services that are provided for the benefit of its cruise brands and Fathom’s selling, general and administrative expenses. Its EAA segment includes AIDA Cruises (AIDA), Costa Cruises (Costa), Cunard, P&O Cruises (Australia), P&O Cruises (the United Kingdom) and ship operations of Fathom. Its Tour and Other segment represents the hotel and transportation operations of Holland America Princess Alaska Tours and three ships that the Company bareboat charter to unaffiliated entities.

About Teekay Tankers

Teekay Tankers Ltd. engages in the marine transportation of crude oil and refined petroleum products through the operation of its oil and product tankers worldwide. The company also provides ship-to-ship transfer services, including lightering and lightering support, consultancy, and LNG terminal management services. As of December 31, 2016, its fleet consisted of 43 owned conventional tankers, 7 in-chartered vessels, and 1 jointly-owned very large crude carrier; and 7 ship-to-ship support vessels. The company's vessels operated under fixed-rate time charter contracts with its customers. Teekay Tankers Ltd. was founded in 2007 and is based in Hamilton, Bermuda.

Receive News & Ratings for Carnival Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Carnival and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply