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Should Value Investors Buy Carnival (CCL) Stock?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Carnival (CCL - Free Report) . CCL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 14.16, while its industry has an average P/E of 20.56. Over the past year, CCL's Forward P/E has been as high as 20.07 and as low as 10.05, with a median of 13.43.

We also note that CCL holds a PEG ratio of 0.75. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CCL's PEG compares to its industry's average PEG of 0.83. Over the past 52 weeks, CCL's PEG has been as high as 0.86 and as low as 0.73, with a median of 0.77.

Investors should also recognize that CCL has a P/B ratio of 3.26. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 4.81. Over the past year, CCL's P/B has been as high as 3.55 and as low as 2.10, with a median of 2.74.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CCL has a P/S ratio of 1.14. This compares to its industry's average P/S of 1.33.

Finally, investors should note that CCL has a P/CF ratio of 7.91. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. CCL's P/CF compares to its industry's average P/CF of 17.70. CCL's P/CF has been as high as 8.64 and as low as 5.11, with a median of 6.73, all within the past year.

Target Hospitality (TH - Free Report) may be another strong Leisure and Recreation Services stock to add to your shortlist. TH is a # 2 (Buy) stock with a Value grade of A.

Target Hospitality is trading at a forward earnings multiple of 39.33 at the moment, with a PEG ratio of 2.62. This compares to its industry's average P/E of 20.56 and average PEG ratio of 0.83.

TH's Forward P/E has been as high as 39.33 and as low as 10.02, with a median of 16.68. During the same time period, its PEG ratio has been as high as 2.62, as low as 0.67, with a median of 1.11.

Furthermore, Target Hospitality holds a P/B ratio of 2.32 and its industry's price-to-book ratio is 4.81. TH's P/B has been as high as 3.11, as low as 1.77, with a median of 2.34 over the past 12 months.

These are just a handful of the figures considered in Carnival and Target Hospitality's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CCL and TH is an impressive value stock right now.


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