Head-To-Head Review: Carnival (NYSE:CCL) & Darden Restaurants (NYSE:DRI)

Darden Restaurants (NYSE:DRI) and Carnival (NYSE:CCL) are both large-cap consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, dividends, valuation and analyst recommendations.

Earnings and Valuation

This table compares Darden Restaurants and Carnival”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Darden Restaurants	$13.21 billion	1.83	$1.21 billion	$10.38	20.38
Carnival	$26.62 billion	1.15	$2.76 billion	$2.22	10.07

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

Analyst Ratings

This is a breakdown of recent ratings for Darden Restaurants and Carnival, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Darden Restaurants	0	9	18	0	2.67
Carnival	0	6	17	2	2.84

Darden Restaurants presently has a consensus price target of $232.86, indicating a potential upside of 10.08%. Carnival has a consensus price target of $34.42, indicating a potential upside of 54.00%. Given Carnival’s stronger consensus rating and higher probable upside, analysts plainly believe Carnival is more favorable than Darden Restaurants.

Profitability

This table compares Darden Restaurants and Carnival’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Darden Restaurants	9.13%	57.44%	9.62%
Carnival	11.24%	26.11%	6.36%

Institutional & Insider Ownership

93.6% of Darden Restaurants shares are owned by institutional investors. Comparatively, 67.2% of Carnival shares are owned by institutional investors. 0.7% of Darden Restaurants shares are owned by company insiders. Comparatively, 7.9% of Carnival shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk and Volatility

Darden Restaurants has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500. Comparatively, Carnival has a beta of 2.31, suggesting that its share price is 131% more volatile than the S&P 500.

Dividends

Darden Restaurants pays an annual dividend of $6.48 per share and has a dividend yield of 3.1%. Carnival pays an annual dividend of $0.60 per share and has a dividend yield of 2.7%. Darden Restaurants pays out 62.4% of its earnings in the form of a dividend. Carnival pays out 27.0% 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. Darden Restaurants has increased its dividend for 4 consecutive years. Darden Restaurants is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

About Darden Restaurants

Darden Restaurants, Inc., together with its subsidiaries, owns and operates full-service restaurants in the United States and Canada. It operates under Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s Prime Seafood, and Capital Burger brand names. Darden Restaurants, Inc. was incorporated in 1995 and is based in Orlando, Florida.

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.