3 Red Flags for Carnival Stock
Down 67% year to date, Carnival Corporation (NYSE: CCL) has probably landed on some value investors' radar. But a cheap stock doesn't always mean a good deal. Let's discuss three red flags that could make the cruise company underperform over the long term.
Like most cruise companies, Carnival was hurt by the COVID-19 pandemic, especially after the U.S. Centers for Disease Control's (CDC) no-sail order scuttled its operations for much of 2020. To survive the crisis, management turned to debt markets.
As of the third quarter, Carnival reports $28.5 billion in long-term debt -- up from just $9.7 billion at the end of 2019. The leverage will be a long-term drag on cash flow and earnings because debt generates interest expense and has to be repaid.
Source Fool.com
