Breaking down the new Carnival Corp volatility

Carnival Corp is generating negative expected returns assuming volatility of 3.3352% on return distribution over 60 days investment horizon. As many investors are getting excited about consumer cyclical space, it is fair to summarize Carnival Corp. We will summarize why some stakeholders are closely monitoring Carnival Corp's volatility. Carnival Corp's seemingly stabilizing volatility may still impact the value of the stock as we estimate Carnival Corp as currently fairly valued. The real value, based on our calculations, is getting close to 23.78 per share.
Published over a year ago
View all stories for Carnival | View All Stories
Macroaxis uses a strict editorial review process to publish stories and blog posts. Our publishers support our company and may receive a small commission when the partner links or references are utilized. Commissions do not affect the opinions or evaluations of our editorial team. The information our editors and media partners deliver is confidential and licensed for your sole use as a Macroaxis user. We reserve all rights to the content of this article, and therefore copying or distributing this story in whole or in part is strictly prohibited.

Reviewed by Ellen Johnson

Carnival Corp has 32.24 B in debt with debt to equity (D/E) ratio of 1.8, which is OK given its current industry classification. The entity has a current ratio of 1.14, demonstrating that it is in a questionable position to pay out its financial commitments when the payables are due.
Volatility is a rate at which the price of Carnival or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Carnival may increase or decrease. In other words, similar to Carnival's beta indicator, it measures the risk of Carnival and helps estimate the fluctuations that may happen in a short period of time. So if prices of Carnival fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.

How important is Carnival's Liquidity

Carnival financial leverage refers to using borrowed capital as a funding source to finance Carnival ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Carnival financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Carnival's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Carnival's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Carnival's total debt and its cash.

Carnival Gross Profit

Carnival Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Carnival previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Carnival Gross Profit growth over the last 10 years. Please check Carnival's gross profit and other fundamental indicators for more details.

Carnival Volatility Drivers

Carnival unsystematic risk is unique to Carnival and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Carnival you can also buy DraftKings. You can also mitigate this risk by investing in the consumer discretionary sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Carnival important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Carnival income statement and balance sheet. Here are more details about Carnival volatility.
0.770.83-0.140.810.810.340.490.480.15-0.35-0.49-0.28-0.70.20.20.260.44
0.770.99-0.670.360.570.530.740.330.0-0.47-0.7-0.43-0.890.340.340.480.87
0.830.99-0.640.430.620.510.710.32-0.03-0.51-0.73-0.39-0.90.390.390.510.85
-0.14-0.67-0.640.340.0-0.33-0.510.280.460.640.760.150.69-0.67-0.68-0.77-0.93
0.810.360.430.340.870.250.160.480.26-0.07-0.13-0.12-0.31-0.13-0.13-0.11-0.01
0.810.570.620.00.870.280.40.450.23-0.19-0.36-0.34-0.580.050.060.10.27
0.340.530.51-0.330.250.280.13-0.15-0.34-0.46-0.440.21-0.310.160.150.260.54
0.490.740.71-0.510.160.40.130.470.28-0.1-0.42-0.67-0.670.130.120.240.54
0.480.330.320.280.480.45-0.150.470.920.610.33-0.75-0.27-0.64-0.64-0.57-0.11
0.150.0-0.030.460.260.23-0.340.280.920.860.6-0.680.01-0.82-0.82-0.79-0.39
-0.35-0.47-0.510.64-0.07-0.19-0.46-0.10.610.860.88-0.390.46-0.93-0.92-0.95-0.7
-0.49-0.7-0.730.76-0.13-0.36-0.44-0.420.330.60.880.050.68-0.85-0.84-0.89-0.83
-0.28-0.43-0.390.15-0.12-0.340.21-0.67-0.75-0.68-0.390.050.40.310.320.24-0.18
-0.7-0.89-0.90.69-0.31-0.58-0.31-0.67-0.270.010.460.680.4-0.43-0.45-0.53-0.81
0.20.340.39-0.67-0.130.050.160.13-0.64-0.82-0.93-0.850.31-0.431.00.980.62
0.20.340.39-0.68-0.130.060.150.12-0.64-0.82-0.92-0.840.32-0.451.00.980.62
0.260.480.51-0.77-0.110.10.260.24-0.57-0.79-0.95-0.890.24-0.530.980.980.74
0.440.870.85-0.93-0.010.270.540.54-0.11-0.39-0.7-0.83-0.18-0.810.620.620.74
Click cells to compare fundamentals

Is Carnival valued adequately by the market?

The new pull down in stock price could raise concerns from stakeholders as the firm it trading at a share price of 22.75 on 25,202,301 in volume. The company management teams have failed to build on market volatilities in August. However, diversifying your overall positions with Carnival Corp may protect your principal portfolio during upcoming market swings. The stock standard deviation of daily returns for 90 days investing horizon is currently 3.34. The above-average risk is mostly attributed to market volatility and speculations regarding some of the upcoming earning calls from Carnival Corp partners.
 2018 2019 2020 2021 (projected)
Current Assets2.06 B10.56 B12.15 B13.11 B
Total Assets45.06 B53.59 B61.63 B56.37 B

Analysis of Carnival Corp

The skewness is down to 0.7 as of today.
As of the 14th of September 2021, Carnival Corp shows the risk adjusted performance of (0.07), and Mean Deviation of 2.62. Carnival Corp technical analysis gives you the methodology to make use of historical prices and volume patterns to determine a pattern that approximates the direction of the firm's future prices. Put another way, you can use this information to find out if the firm will indeed mirror its model of historical prices and volume momentum, or the prices will eventually revert. We were able to break down nineteen technical drivers for Carnival Corp, which can be compared to its rivals. Please confirm Carnival Corp value at risk, and the relationship between the jensen alpha and semi variance to decide if Carnival Corp is priced correctly, providing market reflects its regular price of 22.75 per share. Given that Carnival Corp has jensen alpha of (0.40), we suggest you to validate Carnival Corp's prevailing market performance to make sure the company can sustain itself at a future point.

Our Final Perspective on Carnival Corp

While some other companies in the travel services industry are either recovering or due for a correction, Carnival Corp may not be performing as strong as the other in terms of long-term growth potentials. To conclude, as of the 14th of September 2021, we believe that at this point, Carnival Corp is not too volatile with close to average odds of financial distress within the next 2 years. From a slightly different point of view, the entity appears to be fairly valued. Our ongoing 90 days buy vs. sell advice on the company is Cautious Hold.

Building efficient market-beating portfolios requires time, education, and a lot of computing power!

The Portfolio Architect is an AI-driven system that provides multiple benefits to our users by leveraging cutting-edge machine learning algorithms, statistical analysis, and predictive modeling to automate the process of asset selection and portfolio construction, saving time and reducing human error for individual and institutional investors.

Try AI Portfolio Architect

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Rifka Kats do not own shares of Carnival. Please refer to our Terms of Use for any information regarding our disclosure principles.

Would you like to provide feedback on the content of this article?

You can get in touch with us directly or send us a quick note via email to editors@macroaxis.com