Financial Analysis: Carnival (NYSE:CCL) & Trip.com Group (NASDAQ:TCOM)

Carnival (NYSE:CCL) and Trip.com Group (NASDAQ:TCOM) are both large-cap consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, profitability and institutional ownership.

Profitability

This table compares Carnival and Trip.com Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carnival	11.48%	26.92%	6.20%
Trip.com Group	53.28%	18.56%	11.40%

Analyst Recommendations

This is a breakdown of recent ratings for Carnival and Trip.com Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carnival	0	6	21	0	2.78
Trip.com Group	0	2	9	0	2.82

Carnival currently has a consensus price target of $34.04, indicating a potential upside of 18.63%. Trip.com Group has a consensus price target of $77.00, indicating a potential upside of 46.47%. Given Trip.com Group’s stronger consensus rating and higher possible upside, analysts clearly believe Trip.com Group is more favorable than Carnival.

Institutional & Insider Ownership

67.2% of Carnival shares are owned by institutional investors. Comparatively, 35.4% of Trip.com Group shares are owned by institutional investors. 7.9% of Carnival shares are owned by insiders. Comparatively, 23.0% of Trip.com Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Carnival has a beta of 2.48, meaning that its share price is 148% more volatile than the S&P 500. Comparatively, Trip.com Group has a beta of -0.11, meaning that its share price is 111% less volatile than the S&P 500.

Earnings and Valuation

This table compares Carnival and Trip.com Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carnival	$26.62 billion	1.34	$2.76 billion	$2.25	12.75
Trip.com Group	$8.94 billion	3.84	$4.76 billion	$6.70	7.85

Trip.com Group has lower revenue, but higher earnings than Carnival. Trip.com Group is trading at a lower price-to-earnings ratio than Carnival, indicating that it is currently the more affordable of the two stocks.

Dividends

Carnival pays an annual dividend of $0.60 per share and has a dividend yield of 2.1%. Trip.com Group pays an annual dividend of $0.28 per share and has a dividend yield of 0.5%. Carnival pays out 26.7% of its earnings in the form of a dividend. Trip.com Group pays out 4.2% 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.

Summary

Trip.com Group beats Carnival on 9 of the 16 factors compared between the two stocks.

About Carnival

Carnival Corp. engages in the operation of cruise ships. It operates through the following business segments: North America and Australia (NAA) Cruise, Europe and Asia (EA) Cruise Operations, Cruise Support, and Tour and Others. The North America and Australia (NAA) Cruise segment includes the Carnival Cruise Line, Holland America Line, Princess Cruises, and Seabourn. The Europe and Asia (EA) Cruise Operations segment consists of AIDA, Costa, Cunard, and P&O Cruises (UK). The Cruise Support segment represents port destinations and private islands for the benefit of its cruise brands. The Tour and Other segment operates hotel and transportation operations of Holland America Princess Alaska Tours. The company was founded in 1972 and is headquartered in Miami, FL.

About Trip.com Group

Trip.com Group Limited, through its subsidiaries, operates as a travel service provider for accommodation reservation, transportation ticketing, packaged tours and in-destination, corporate travel management, and other travel-related services in China and internationally. The company acts as an agent for hotel-related transactions and selling air tickets, as well as provides train, long-distance bus, and ferry tickets; travel insurance products, such as flight delay, air accident, and baggage loss coverage; and air-ticket delivery, online check-in and seat selection, express security screening, real-time flight status tracker, and airport VIP lounge services. It also provides independent leisure travelers bundled packaged-tour products comprising group, semi-group, and customized and packaged tours with various transportation arrangements, including air, cruise, bus, and car rental services. In addition, the company offers integrated transportation and accommodation services; destination transportation and ticket, activity, insurance, visa, and tour guide services; user support, supplier management, and customer relationship management services; and in-destination products and services. Further, It provides its corporate clients with business visit, incentive trip, meeting and conference, travel data collection and analysis, and industry benchmarking solutions; and Corporate Travel Management System, an online platform that integrates information management, online booking and authorization, online inquiry, and travel reporting systems. Additionally, the company offers online advertising and financial services, such as marketing planning and travel media services. It operates under the Ctrip, Qunar, Trip.com, and Skyscanner brands. The company was formerly known as Ctrip.com International, Ltd. and changed its name to Trip.com Group Limited in October 2019. Trip.com Group Limited was founded in 1999 and is based in Singapore.