While demand remains strong, the company’s debt load is fearsome. Total debt amounts to about $36.1 billion, and net debt totals $30.6 billion, down by about $360 million and $550 million, respectively, at the end of the second quarter. Carnival is buying back stock and paying off debt. That is good enough for investors until something changes their minds. Carnival is risky and has rewarded investors willing to take on those risks. When the company reports earnings first thing Friday morning, we shall see how Carnival’s comeback is progressing.
Analysts remain mostly optimistic on the stock, with 16 of 24 analysts having a Buy or Strong Buy rating and another four assigning Hold ratings. At a share price of around $14.00, the implied gain based on a median price target of $20.00 is 42.9%. At the high target of $25.00, the upside potential is 78.6%.
For the company’s third quarter of fiscal 2023, analysts have forecast revenue of $6.68 billion, up 36.1% sequentially and by 55.3% year over year. Adjusted EPS are forecast at $0.74, better than the prior quarter’s loss per share of $0.31 and much better than last year’s quarterly loss of $0.58 per share. For the full fiscal year that ends in November, Carnival is expected to post a per-share loss of just $0.14, compared with last year’s loss of $4.67 per share. Revenue is forecast to reach $21.34 billion, up 75.4% year over year. Carnival posted revenue of $12.17 billion in fiscal year 2022.
Carnival is expected to post earnings of $0.99 in the 2024 fiscal year, yielding a price multiple of 14.0, and $1.37 in fiscal 2025, for a multiple of 10.1. The 52-week trading range is $6.11 to $19.55. The company does not pay a dividend. Total shareholder return for the past year is 56.97%.
Nike
Over the past 12 months, shares of athletic gear maker Nike Inc. (NYSE: NKE) have fallen by about 6%, including a decline of about 23% so far in 2023. The Dow Jones industrial average component needs to show significant recovery in China and some long-anticipated brand strength. The company’s own forecasts call for growth, even if only modestly, in the first quarter of the new fiscal year. Nike reports results later on Thursday.
Of 36 brokerages covering the stock, 23 have a Buy or Strong Buy rating. Ten more have Hold ratings. At a price of around $90.00 a share, the upside potential based on a median price target of $125.00 is about 39%. At the high price target of around $152.00, the implied upside is almost 69%.
For the company’s first quarter of fiscal 2024, revenue is expected to come in at $13 billion, up 1.4% sequentially and 2.4% higher year over year. Adjusted EPS are forecast at $0.76, up 14.9% sequentially and by 10.6% year over year. For the full fiscal year ending next May, estimates call for EPS of $3.68, up 13.9%, on sales of $53.45 billion, up about 4.4%.
Nike stock trades at 24.6 times expected 2024 EPS, 21.0 times estimated 2025 earnings of $4.30 and 18.2 times estimated 2026 earnings of $4.97 per share. The 52-week range is $82.22 to $131.31. Nike pays an annual dividend of $1.36 (yield of 1.51%). Total shareholder return for the past year was negative 4.90%.
Originally published at 24/7 Wall St.
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