Carnival Cruise Lines - Yogurt Anyone?

Carnival Corporation CCL – Hold based on a recent price of $39.81 and a fair value estimate of $36-$42.

The company operates as a worldwide cruise and vacation company.

Fiscal 2012 was a tough year for the company, requiring passengers to know how to hang it over the side and how to row.

Aside from that, this is another one of the those stocks that there really isn't any reason to own. It's also one of those stocks that make me go...huh?

Over the course of the past year, the price of the stock has increased by 7.5% even though y-o-y earnings were down 11% on revenues that were 3% less than the prior year. Couple that with y-o-y free cash flow growth of (-72%) and a minimal reduction in debt of 3.5%, and you begin to understand my huh reaction to the stock.

Admittedly, the y-o-y 18% increase in dividends was a nice touch, but when folks are whizzing in buckets by the light of the silvery moon, a few extra dollars in dividend payments is probably not a bad plan.

Going forward, earnings growth is expected to come in at something around 6%, and admittedly at this juncture it appears revenues are ahead of last year. But all of that has to translate into earnings, and if that doesn't happen, it could be time to make for the gangplank on this one.

Wax

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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