Royal Caribbean Cruises (NYSE: RCL) and Carnival Corporation (NYSE:CUK) are both large-cap consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, profitabiliy, earnings and dividends.

Volatility and Risk

Royal Caribbean Cruises has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500. Comparatively, Carnival Corporation has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Valuation and Earnings

This table compares Royal Caribbean Cruises and Carnival Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Royal Caribbean Cruises $8.68 billion 2.97 $2.67 billion $7.12 16.83
Carnival Corporation $16.77 billion 2.96 $4.79 billion $3.76 18.20

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

Dividends

Royal Caribbean Cruises pays an annual dividend of $1.92 per share and has a dividend yield of 1.6%. Carnival Corporation pays an annual dividend of $1.60 per share and has a dividend yield of 2.3%. Royal Caribbean Cruises pays out 27.0% of its earnings in the form of a dividend. Carnival Corporation pays out 42.6% 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. Royal Caribbean Cruises has increased its dividend for 5 consecutive years.

Profitability

This table compares Royal Caribbean Cruises and Carnival Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Royal Caribbean Cruises 17.73% 16.71% 6.94%
Carnival Corporation 16.48% 11.26% 6.52%

Insider & Institutional Ownership

71.7% of Royal Caribbean Cruises shares are held by institutional investors. Comparatively, 4.3% of Carnival Corporation shares are held by institutional investors. 15.3% of Royal Caribbean Cruises shares are held by insiders. Comparatively, 0.0% of Carnival Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations for Royal Caribbean Cruises and Carnival Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Caribbean Cruises 0 3 15 0 2.83
Carnival Corporation 0 0 0 0 N/A

Royal Caribbean Cruises currently has a consensus target price of $116.92, suggesting a potential downside of 2.41%. Given Royal Caribbean Cruises’ higher probable upside, analysts plainly believe Royal Caribbean Cruises is more favorable than Carnival Corporation.

Summary

Royal Caribbean Cruises beats Carnival Corporation on 12 of the 16 factors compared between the two stocks.

Royal Caribbean Cruises Company Profile

Royal Caribbean Cruises Ltd. is a cruise company. The Company owns and operates three global cruise brands: Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises (Global Brands). The Company also own joint venture interest in the German brand TUI Cruises, interest in the Spanish brand Pullmantur and interest in the Chinese brand SkySea Cruises (collectively, Partner Brands). Together, its Global Brands and its Partner Brands operate a combined total of 49 ships in the cruise vacation industry with an aggregate capacity of approximately 123,270 berths as of December 31, 2016. As of December 31, 2016, the Company’s ships offer a selection of itineraries that call on approximately 535 destinations in 105 countries, covering all seven continents. Royal Caribbean International offers a range of itineraries to the destinations, including Alaska, Asia, Australia, Canada, the Caribbean, the Panama Canal and New Zealand with cruise lengths that range from 2 to 24 nights.

Carnival Corporation Company Profile

Carnival plc is a leisure travel company. The Company’s segments include North America, and Europe, Australia & Asia (EAA). Its North America segment includes Carnival Cruise Line, Princess Cruises (Princess), Holland America Line and Seabourn. Its EAA segment includes Costa Cruises (Costa), AIDA Cruises (AIDA), P&O Cruises (the United Kingdom), P&O Cruises (Australia) and Cunard. It also includes Cruise Support segment, which represents its portfolio of port destinations and private islands. In addition to its cruise operations, it owns Holland America Princess Alaska Tours, a tour company in Alaska and the Canadian Yukon. Its tour company owns and operates hotels, lodges, glass-domed railcars and motorcoaches. Its Carnival Cruise Line offers cruises generally from 3 to 8 days with almost all of its ships departing from 16 convenient United States home ports located along the East, Gulf and West coasts, Puerto Rico and Hawaii, as of November 30, 2016.

Receive News & Stock Ratings for Royal Caribbean Cruises Ltd. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Royal Caribbean Cruises Ltd. and related stocks with our FREE daily email newsletter.