Last update on 2024-06-06

Carnival (CCL) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Discover the 2023 Piotroski F-Score analysis for Carnival (CCL) with a final score of 6/9, assessing profitability, liquidity, and efficiency.

Short Analysis - Piotroski Score: 6

We're running Carnival (CCL) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a number between 0 to 9 that reflects a company's financial health using profitability, liquidity, and leverage factors. Carnival (CCL) has a score of 6 for 2023 based on Piotroski criteria. Key takeaways: 1. Net Income: Negative at -$74M, scores 0. 2. Operating Cash Flow: Positive at $4.281B, scores 1. 3. Return on Assets improved but is still negative, scores 1. 4. Operating Cash Flow is higher than Net Income, scores 1. 5. Leverage has decreased, scores 1. 6. Current Ratio decreased, scores 0. 7. Share dilution observed, scores 0. 8. Gross Margin improved, scores 1. 9. Asset Turnover increased, scores 1.

Insights for Value Investors Seeking Stable Income

Carnival (CCL) shows some positive signs with a Piotroski F-Score of 6. While it has strong cash flow and decreased leverage, its net income is negative and shares are being diluted. The improving metrics like Gross Margin and Asset Turnover suggest a recovery post-pandemic, but the company's liquidity is a concern. Potential investors should weigh the recent positive trends against the ongoing challenges and industry comparisons before making a decision.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Carnival (CCL)

Company has a positive net income?

Examine if the net income for Carnival (CCL) in 2023 is positive or negative and how it contributes to the overall financial health analysis.

The net income in 2023 for Carnival (CCL) is -$74,000,000, which is negative. According to the Piotroski F-Score model, we assign a score of 1 if the net income is positive and 0 if it is negative. Therefore, Carnival's 2023 net income score is 0. Looking over the past two decades, there has been significant fluctuation in net income, peaking in 2019 with a positive $3,152,000,000, and drastically falling into negative figures from 2020 onward, due largely to the global pandemic's impact on the cruise industry. The trend in the recent years is concerning, reflecting the substantial challenges the company has been facing.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the company's ability to generate cash from its regular business activities.

For Carnival (CCL) in 2023, the CFO stands at $4.281 billion. This value is positive, thereby adding 1 point in the Piotroski Analysis. Historically, the company's CFO figures have shown a fluctuating but generally rising trend, peaking at over $5 billion in 2018 and 2019 before taking a hit during the COVID-19 pandemic years of 2020 and 2021. The positive reversal in 2023 to $4.281 billion signals a recovery and is good for the financial health of Carnival.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company's ability to generate profit from its assets. It is a vital indicator of financial health and efficiency.

Carnival Corporation (CCL) experienced a significant improvement in ROA from -0.116 in 2022 to -0.0015 in 2023. This increase signals a positive trend, suggesting a recovery in their ability to generate returns from their assets, potentially driven by improved operational efficiency and cost management. This rise, albeit still negative, is noteworthy especially when compared with the turmoil caused by the COVID-19 pandemic, where operating cash flow plummeted to -$6.301 billion in 2020 from $5.475 billion in 2019. The industry median ROA over the last 20 years has generally stayed positive, reinforcing the competitive pressure for Carnival to restore and maintain positive returns. Overall, the improvement in ROA is good and earns a point in the Piotroski scoring model for 2023.

Operating Cashflow are higher than Netincome?

This criterion assesses the quality of a company's earnings by comparing operating cash flow with net income.

In 2023, Carnival Corporation (CCL) demonstrated a healthy financial indicator with an Operating Cash Flow (OCF) of $4,281,000,000 significantly surpassing the Net Income, which stood at -$74,000,000. This substantial disparity indicates that the company’s earnings are backed by strong cash generation, a positive trait considering that net income alone might be affected by non-cash items and accounting adjustments. Historical operating cash flow data reveals a recent positive turnaround in 2023 after struggling with negative cash flows during the pandemic years (2020-2022). Therefore, 1 point is granted for this criterion, signaling a positive trend in the company’s cash management.

Liquidity of Carnival (CCL)

Leverage is declining?

Change in Leverage examines the shift in a company's leverage ratio over time. A decrease is often viewed favorably as it suggests stronger financial stability.

For Carnival (CCL), the leverage ratio increased from 0.641 in 2022 to 0.6037 in 2023. This indicates that the company's leverage has decreased, resulting in a financially stronger position relative to the previous year. Although this is a positive development, the leverage ratio for the years 2021, 2022, and 2023 is considerably higher than the historical average of around 0.2147 from 2016-2019, signaling that while the immediate trend is favorable, the company still has significant financial risk compared to its long-term historical performance. This adds 1 point to the Piotroski score.

Current Ratio is growing?

Current Ratio is used to measure a company's ability to cover its short-term liabilities with its short-term assets.

Comparing the Current Ratio of 0.4587 in 2023 with 0.7065 in 2022, we observe a decrease. This signals a weakening position in short-term financial health, which could raise concerns about the company's liquidity. Typically, higher Current Ratios are favorable because they suggest better liquidity. In Carnival's case, this decrease signifies it is less able to cover its short-term liabilities compared to the previous year, scoring 0 points for this criterion. Historical industry data shows the industry median ratio for 2023 is 1.0868, significantly higher than Carnival’s 0.4587, emphasizing its below-average liquidity in the industry.

Number of shares not diluted?

Change in Shares Outstanding measures the issuance or buyback of shares, which impacts the ownership structure and shareholder value.

In 2022, Carnival Corp (CCL) had 1,180,000,000 Outstanding Shares, which increased to 1,262,000,000 in 2023. This represents an increase in Outstanding Shares, which is not favorable under the Piotroski criterion that favors share buybacks or reduced shares outstanding. Therefore, Carnival Corp does not earn a point based on this criterion (Score: 0). Historically, the number of shares has increased significantly from 71,927,710 in 2003 to its current level, reflecting sustained dilution over the past two decades. This trend may be driven by capital raising activities.

Operating of Carnival (CCL)

Cross Margin is growing?

Change in Gross Margin measures the increase or decrease in a company's gross profit as a percentage of revenue, indicating the efficiency of production processes.

Comparing Carnival's Gross Margin of 33.7% in 2023 to 3.39% in 2022, we observe a significant increase. This rise suggests a substantial improvement in cost management or pricing strategies. Given the 2023 margin surpasses the massive challenges in previous years, this positive trend merits adding 1 point. However, against the industry median of 82.14%, Carnival still exhibits room for growth, highlighting competitive inefficiencies relative to peers.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales or revenue.

The Asset Turnover for Carnival Corporation (CCL) increased from 0.2317 in 2022 to 0.4283 in 2023. This signifies a notable improvement in how effectively the company is utilizing its assets to generate revenue. An increase in Asset Turnover is a positive sign as it indicates that Carnival has become more efficient in managing its assets. Over the past 20 years, the Asset Turnover ratio has fluctuated, but the sharp increase from 0.2317 to 0.4283 suggests a strong recovery and operational efficiency post the challenging years during the pandemic. Therefore, an additional point is warranted.