Reviewing Travel + Leisure (NYSE:TNL) and Carnival (NYSE:CCL)

Travel + Leisure (NYSE:TNL) and Carnival (NYSE:CCL) are both consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, profitability, analyst recommendations and valuation.

Analyst Ratings

This is a breakdown of current recommendations for Travel + Leisure and Carnival, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Travel + Leisure	0	3	8	0	2.73
Carnival	0	6	21	0	2.78

Travel + Leisure currently has a consensus target price of $85.90, indicating a potential upside of 20.59%. Carnival has a consensus target price of $34.17, indicating a potential upside of 33.23%. Given Carnival’s stronger consensus rating and higher probable upside, analysts plainly believe Carnival is more favorable than Travel + Leisure.

Volatility & Risk

Travel + Leisure has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, Carnival has a beta of 2.48, meaning that its share price is 148% more volatile than the S&P 500.

Valuation & Earnings

This table compares Travel + Leisure and Carnival”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Travel + Leisure	$4.02 billion	1.11	$230.00 million	$3.41	20.89
Carnival	$26.62 billion	1.19	$2.76 billion	$2.25	11.40

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

Dividends

Travel + Leisure pays an annual dividend of $2.40 per share and has a dividend yield of 3.4%. Carnival pays an annual dividend of $0.60 per share and has a dividend yield of 2.3%. Travel + Leisure pays out 70.4% of its earnings in the form of a dividend. Carnival pays out 26.7% 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. Travel + Leisure has raised its dividend for 5 consecutive years. Travel + Leisure is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Travel + Leisure and Carnival’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Travel + Leisure	5.74%	-47.77%	6.24%
Carnival	11.48%	26.92%	6.20%

Insider & Institutional Ownership

87.5% of Travel + Leisure shares are held by institutional investors. Comparatively, 67.2% of Carnival shares are held by institutional investors. 3.8% of Travel + Leisure shares are held by company insiders. Comparatively, 7.9% of Carnival shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Carnival beats Travel + Leisure on 11 of the 17 factors compared between the two stocks.

About Travel + Leisure

Travel + Leisure Co., together with its subsidiaries, provides hospitality services and travel products in the United States and internationally. The company operates in two segments, Vacation Ownership; and Travel and Membership. The Vacation Ownership segment develops, markets, and sells vacation ownership interests (VOIs) to individual consumers, as well as provides consumer financing in connection with the sale of VOIs; and property management services at resorts. The Travel and Membership segment operates various travel businesses, including three vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals. This segment also offers private-label travel booking technology solutions. The company was formerly known as Wyndham Destinations, Inc. and changed its name to Travel + Leisure Co. in February 2021. Travel + Leisure Co. was founded in 1990 and is headquartered 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.