Analyzing Carnival (NYSE:CCL) & Reading International (NASDAQ:RDI)

Reading International (NASDAQ:RDI) and Carnival (NYSE:CCL) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, profitability, earnings, dividends, risk and institutional ownership.

Insider and Institutional Ownership

44.7% of Reading International shares are owned by institutional investors. Comparatively, 67.2% of Carnival shares are owned by institutional investors. 25.7% of Reading International shares are owned by insiders. Comparatively, 7.6% of Carnival shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Reading International and Carnival’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Reading International	-7.54%	N/A	-3.58%
Carnival	10.07%	27.86%	5.64%

Analyst Ratings

This is a summary of current recommendations and price targets for Reading International and Carnival, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Reading International	1	0	0	0	1.00
Carnival	0	8	17	1	2.73

Carnival has a consensus target price of $33.00, suggesting a potential upside of 12.25%. Given Carnival’s stronger consensus rating and higher possible upside, analysts clearly believe Carnival is more favorable than Reading International.

Risk & Volatility

Reading International has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500. Comparatively, Carnival has a beta of 2.68, indicating that its share price is 168% more volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Reading International	$210.53 million	0.16	-$35.30 million	($0.74)	-1.96
Carnival	$25.02 billion	1.37	$1.92 billion	$1.92	15.31

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

Summary

Carnival beats Reading International on 14 of the 15 factors compared between the two stocks.

About Reading International

Reading International, Inc., together with its subsidiaries, focuses on the ownership, development, and operation of entertainment and real property assets in the United States, Australia, and New Zealand. The company operates in two segments, Cinema Exhibition and Real Estate. The Cinema Exhibition segment operates multiplex cinemas. This segment operates its cinema exhibition businesses under the Reading Cinemas, Consolidated Theatres, Angelika Film Center, State Cinema by Angelika, Angelika Anywhere, Event Cinemas, and Rialto Cinemas brands. The Real Estate segment develops, rents, or licenses retail, commercial, and live theater assets. Reading International, Inc. was incorporated in 1999 and is headquartered in New York, New York.

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.