Carnival Corp. and Altria Group Inc. have both experienced significant declines in their stock prices over the past five years. While Carnival’s stock dropped nearly 70%, Altria’s stock slumped 20%. However, considering these broken blue chip stocks, there is a debate about which one has a better chance of making a comeback.
Carnival, one of the world’s largest cruise line operators, experienced steady growth leading up to the pandemic. Its revenue grew at a compound annual growth rate (CAGR) of 6% between fiscal 2014 and fiscal 2019. However, the pandemic hit the travel industry hard, causing Carnival’s revenue to plummet 73% in fiscal 2020 and another 66% in fiscal 2021. Despite the challenges, Carnival managed to achieve a revenue of $12.2 billion in fiscal 2022, representing a significant increase compared to the previous year. Analysts expect the company’s revenue to continue rising in fiscal 2023, but its high long-term debt might still pose a challenge.
On the other hand, Altria, the leading tobacco company in the United States, has faced declining domestic smoking rates for years. To counter this, the company raised prices, cut costs, and diversified its business beyond cigarettes. Altria’s revenue grew at a CAGR of 5% from 2014 to 2019, despite a decrease in annual cigarette shipments. However, the pandemic intensified the slowdown in the domestic cigarette market. Altria’s revenue growth slowed down, and its annual cigarette shipments dropped. The company recently acquired the e-cigarette maker Njoy to recover from setbacks, but its outlook remains uncertain due to its high long-term debt and negative shareholder equity.
While both stocks have their challenges, some believe Carnival has a clearer path to a long-term recovery compared to Altria. The expectation of increasing revenue in fiscal 2023, combined with a recovering travel industry, contributes to this belief. However, it’s important to note that sticking with more reliable blue chip stocks with healthier balance sheets might be a safer option for investors.
In conclusion, both Carnival and Altria have experienced significant declines in their stock prices, but Carnival appears to have a clearer path towards recovery. Nonetheless, investors should carefully evaluate the risks involved and consider other blue chip stocks with healthier balance sheets as well.
