Carnival (CCL) Tops Q2 Earnings & Sales, Updates Guidance

Carnival Corporation CCL reported its second-quarter fiscal 2017 results, wherein both earnings and revenues beat the Zacks Consensus Estimate.

In fact, this Miami-based cruise company’s adjusted earnings per share of 52 cents outpaced the Zacks Consensus Estimate of 47 cents by 10.6% and also surpassed the guided range of 43 cents to 47 cents. Moreover, earnings increased 6.1% year over year. It is to be noted that the company’s quarterly earnings exclude net unrealized losses on fuel derivatives.

 

Total revenue increased about 6.5% year over year to $3.95 billion on the back of Carnival’s efforts to drive demand.

Net revenue yields (in constant currency) increased 5.1% year over year, higher than the growth range of 2.5-3.5% projected in March. Meanwhile, gross revenue yields increased 2.7%.

Segment Revenues

Carnival earns revenues from its Passenger Tickets business, Onboard and Other as well as Tour and Other segments.

Passenger Tickets: Passenger Tickets revenues increased 6.5% year over year to $2.87 billion.

Onboard and Other: Onboard and Other revenues were $1.04 billion, up 5.9% year over year.

Tour and Other: Revenues from this segment jumped 19.4% year over year to $37 million.

Expenses

Net cruise costs (in constant dollar) per available lower berth day (ALBD), excluding fuel and impairments, increased 1.5% at the lower end of the March guidance. Also, gross cruise costs (including fuel) per ALBD in current dollars, increased 5.3%.

Carnival Corporation Price, Consensus and EPS Surprise

Carnival Corporation Price, Consensus and EPS Surprise | Carnival Corporation Quote

Third-Quarter Fiscal 2017 View

Fiscal third-quarter 2017 net revenue yields in constant dollars are expected to increase roughly 4% year over year. Net cruise costs, excluding fuel per ALBD, are expected to be in line with the prior year figure, on a constant dollar basis.

Based on the above factors, the company expects adjusted earnings per share in the range of $2.16 to $2.20. Meanwhile, the Zacks Consensus Estimate for earnings is pegged at $2.14 per share.

Fiscal 2017 Guidance

The company anticipates fiscal 2017 adjusted earnings per share in the range of $3.60 to $3.70 (previous projection was in the range of $3.50 to $3.70).

Based on current booking trends, the company expects fiscal 2017 net revenue yields in constant currency to be up approximately 3.5% (higher than previous expectation of 3%).

Also, the company continues to expect net cruise costs, excluding fuel per ALBD, on a constant currency basis for fiscal 2017, to be up nearly 1.5% (higher than previous expectation of 1%).

Management noted that cumulative advance bookings for the next three quarters are well ahead of the year-ago level at significantly higher prices.

Zacks Rank & Stocks to Consider

Carnival currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Leisure and Recreation Services space include:

The Marcus Corp. MCS sporting a Zacks Rank #1. Its long-term growth estimate is pegged at 15%, while the industry’s average is 12%.

RCI Hospitality Holdings, Inc. RICK is another Zacks Rank #1 company whose current quarter and current year earnings estimates have moved up 19.4% and 13.1%, respectively, in the past two months.

Royal Caribbean Cruises Ltd. RCL carries a Zacks Rank #2 (Buy). Its current quarter and current year earnings estimates have moved up 15.6% and 2.4%, respectively, in the past two months.

Looking for Ideas with Even Greater Upside?

Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Click for Free Marcus Corporation (The) (MCS) Stock Analysis Report >>
 
Click for Free Carnival Corporation (CCL) Stock Analysis Report >>
 
Click for Free Royal Caribbean Cruises Ltd. (RCL) Stock Analysis Report >>
 
Click for Free RCI Hospitality Holdings, Inc. (RICK) Stock Analysis Report >>
 
To read this article on Zacks.com click here.
 
Zacks Investment Research