Contrasting Carnival (NYSE:CUK) & Travel + Leisure (NYSE:TNL)

Carnival (NYSE:CUK) and Travel + Leisure (NYSE:TNL) are both mid-cap consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Insider and Institutional Ownership

23.8% of Carnival shares are owned by institutional investors. Comparatively, 87.5% of Travel + Leisure shares are owned by institutional investors. 0.1% of Carnival shares are owned by company insiders. Comparatively, 3.8% of Travel + Leisure shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations and price targets for Carnival and Travel + Leisure, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carnival	0	1	1	0	2.50
Travel + Leisure	0	3	8	0	2.73

Travel + Leisure has a consensus target price of $85.90, suggesting a potential upside of 27.69%. Given Travel + Leisure’s stronger consensus rating and higher possible upside, analysts clearly believe Travel + Leisure is more favorable than Carnival.

Profitability

This table compares Carnival and Travel + Leisure’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carnival	11.48%	27.89%	6.21%
Travel + Leisure	5.74%	-47.77%	6.24%

Dividends

Carnival pays an annual dividend of $0.15 per share and has a dividend yield of 0.6%. Travel + Leisure pays an annual dividend of $2.40 per share and has a dividend yield of 3.6%. Carnival pays out 6.7% of its earnings in the form of a dividend. Travel + Leisure pays out 70.4% 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. Travel + Leisure has increased its dividend for 5 consecutive years. Travel + Leisure is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Carnival and Travel + Leisure”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carnival	$26.62 billion	0.17	$2.76 billion	$2.25	10.61
Travel + Leisure	$4.02 billion	1.04	$230.00 million	$3.41	19.73

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

Risk & Volatility

Carnival has a beta of 2.46, indicating that its share price is 146% more volatile than the S&P 500. Comparatively, Travel + Leisure has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500.

Summary

Travel + Leisure beats Carnival on 11 of the 17 factors compared between the two stocks.

About Carnival

Carnival Plc operates as a global cruise and vacation company. The firm offers holiday and vacation products to a customer base that is broadly varied in terms of cultures, languages and leisure-time preferences. It operates through the North America and Australia (NAA), Europe and Asia (EA), Cruise Support, and Tour and Other segments. The NAA segment includes Carnival Cruise Line, Holland America Line, P and O Cruises (Australia), Princess and Seabourn. The EA segment includes AIDA, Costa, Cunard, and P and O Cruises (UK). The Cruise Support segment includes a portfolio of port destinations and other services, all of which are operated for the benefit of cruise brands. The Tour and Other segment represents the hotel and transportation operations of Holland America Princess Alaska Tours and other operations. The company was founded on July 19, 2000 and is headquartered in Southampton, the United Kingdom.

About Travel + Leisure

Travel + Leisure Co., together with its subsidiaries, provides hospitality services and travel products in the United States and internationally. The company operates in two segments, Vacation Ownership; and Travel and Membership. The Vacation Ownership segment develops, markets, and sells vacation ownership interests (VOIs) to individual consumers, as well as provides consumer financing in connection with the sale of VOIs; and property management services at resorts. The Travel and Membership segment operates various travel businesses, including three vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals. This segment also offers private-label travel booking technology solutions. The company was formerly known as Wyndham Destinations, Inc. and changed its name to Travel + Leisure Co. in February 2021. Travel + Leisure Co. was founded in 1990 and is headquartered in Orlando, Florida.