The COVID-19 pandemic has caused the hospitality sector to grind to a halt in the spring of 2020. However, investors are having their faith restored as US states pursue a reopening. The cruise industry is poised to be a big beneficiary of this push.
Carnival Corp (NYSE:CCL) is a Miami-based cruise operator. Currently, it is the world’s largest travel leisure company. Shares were up 12% in mid-afternoon trading on June 8. The stock is now up 64% month over month.
In early June, AIDA Cruises suspended cruises with ports in the United States and Canada for the rest of 2020. Carnival stock last had a favourable price-to-earnings ratio of 8.9 and a price-to-book value of 0.7. Shares are still trading at the low end of its 52-week range.
Royal Caribbean (NYSE:RCL) is another top Miami-based cruise company. Its shares were up 4.1% in mid-afternoon trading at the time of this writing. However, the stock had still dropped 47% from the prior year. The company released its first quarter 2020 results on May 20.
In Q1, Royal Caribbean reported a net loss of $1.4 billion or $6.91 per share compared to net earnings of $249.7 million or $1.19 per share in the prior year. The company expects to report another sharp net loss in the second quarter. Shares of Royal last possessed a high P/E ratio but a solid P/B value of 1.4.
Investors should expect more stormy conditions for cruise companies in the summer months. However, the industry is on the road to recovery.
