Are Investors Undervaluing Carnival (CCL) Right Now?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Carnival (CCL). CCL is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 13.58, while its industry has an average P/E of 18.13. CCL's Forward P/E has been as high as 20.07 and as low as 8.45, with a median of 13.45, all within the past year.

Investors should also note that CCL holds a PEG ratio of 0.61. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CCL's PEG compares to its industry's average PEG of 0.91. CCL's PEG has been as high as 0.86 and as low as 0.37, with a median of 0.60, all within the past year.

Another valuation metric that we should highlight is CCL's P/B ratio of 3.56. 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 solid versus its industry's average P/B of 4.73. CCL's P/B has been as high as 3.79 and as low as 2.09, with a median of 3.05, over the past year.

Finally, we should also recognize that CCL has a P/CF ratio of 8.05. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 14.49. Over the past 52 weeks, CCL's P/CF has been as high as 8.64 and as low as 4.49, with a median of 7.39.

The Marcus (MCS) may be another strong Leisure and Recreation Services stock to add to your shortlist. MCS is a Zacks Rank of #2 (Buy) stock with a Value grade of A.

Shares of The Marcus are currently trading at a forward earnings multiple of 29.60 and a PEG ratio of 1.97 compared to its industry's P/E and PEG ratios of 18.13 and 0.91, respectively.

MCS's Forward P/E has been as high as 140.38 and as low as -96.46, with a median of 39.23. During the same time period, its PEG ratio has been as high as 9.36, as low as -6.43, with a median of 2.62.

The Marcus also has a P/B ratio of 1.09 compared to its industry's price-to-book ratio of 4.73. Over the past year, its P/B ratio has been as high as 1.58, as low as 1.02, with a median of 1.20.

These are just a handful of the figures considered in Carnival and The Marcus'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 MCS is an impressive value stock right now.

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This article originally published on Zacks Investment Research (zacks.com).

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