The past three years have provided Carnival(LSE: CCL) shareholders with a rare bounty as the cruise operator more than doubled its earnings per share between 2013 and 2016, to 373 cents -- and the falling pound has increased the sterling value of that.
The result has been a 165% climb in the share price over the period, to today's 5,195p, while the dividend has been boosted by 35% to reach 135 cents last year -- and it was covered 2.7 times, so not at all stretched.
That 2016 dividend yielded a fairly modest 2.6% (with the FTSE 100 average coming in around 3%), but its progressive nature can provide the opportunity to lock-in effective high future yields today.
A good start
Second-quarter results delivered Thursday suggest the growth story is still going well, with adjusted net income of $378m providing a second-quarter adjusted earnings record.
Net revenue guidance for the full year now stands at 3.5% ahead (up from March's guidance of 3%), while net cruise costs should be up around 1.5%.
Full-year EPS is expected to be between $3.60 and $3.70, up from 2016's $3.45 figure. The mid-point of that would provide a 6% boost from the previous year, which is not up to the previous few years' stellar performances, but would provide a very nice annual rise if it's sustained over the long term.
The figures suggests a forward P/E of around 18, which might seem a little high, but I see Carnival as a quality company that deserves a higher-than-average rating.
And though the dividend yield is not among the highest, I expect to see above-inflation rises continuing. Carnival is also redistributing cash through share buybacks, with $2.7bn achieved since late 2015 and a further $1bn reauthorised.
I see further long-term growth here.
I like companies with a clear focus, and that makes Findel(LSE: FDL), with its diverse coverage of online retail and education, not my typical kind of investment.
But I can't deny the attractive look of its valuation, especially with growth indicators seeming strong. Its earnings record looks erratic, but EPS has almost doubled over the past three years. And though the year to March 2017 is expected to have brought in a 9% drop, mooted rises of 19% and 28% for 2018 and 2019 suggest PEG ratios of 0.4 and 0.2 respectively -- with anything under 0.7 usually making growth investors' eyes sparkle.
The P/E multiple would drop as low as 6.4 by 2019, which is less than half the FTSE long-term average.
Full-year results are due on 27 June, and April's trading update told us to expect a 10% rise in like-for-like sales, with pre-tax profit pretty much in line with the predicted EPS fall.
A tale of two businesses
Findel's Express Gifts arm has seen a 14% rise in sales, with customer numbers up by 21% in the final quarter. Against that, Findel Education "has continued to see difficult market conditions" with like-for-like sales down 4%.
That emphasises for me that this is really two quite disparate businesses masquerading as one, and I don't see any synergies here or any justification for the partnership. I can't help wondering if shareholders would be better served by separating them, possibly by selling off the educational business.
Nevertheless, at today's valuation I see Findel as an attractive growth proposition, though I'd keep an eye on core net debt which stood at £94.5m at the halfway stage -- that's a bit high for a low-margin business.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.