Why Is Carnival (CCL) Up 2.7% Since the Last Earnings Report?

A month has gone by since the last earnings report for Carnival Corporation CCL. Shares have added about 2.7% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Carnival Beats on Q1 Earnings, Lifts FY17 Guidance

Carnival reported its first-quarter fiscal 2017 results, wherein earnings beat the Zacks Consensus Estimate while revenues came in line.

The Miami-based cruise company’s adjusted earnings per share of $0.38 outpaced the Zacks Consensus Estimate of $0.35 by 8.6% and also surpassed the guided range of $0.31–$0.35. However, earnings declined 2.5% year over year. Quarterly earnings exclude net unrealized losses on fuel derivatives.

Total revenue increased 3.8% year over year to $3.79 billion supported by Carnival’s efforts to drive demand.

Net revenue yields (in constant currency) increased 3.8% year over year, higher than the growth range of 1.5–2.5% projected in December. However, gross revenue yields increased by a mere 0.1%.

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 3.2% year over year to $2.80 billion.

Onboard and Other: Onboard and Other revenues were $978 million, up 6% year over year.

Tour and Other: Revenues declined 10% year over year to $9 million.

Expenses

Net cruise costs (in constant dollar) per available lower berth day (ALBD) (fuel and impairments excluded) increased 3.9%, higher than the December guidance. Gross cruise costs, including fuel per ALBD in current dollars, increased 5.3%.

Second-Quarter Fiscal 2017 View

Fiscal second-quarter 2017 net revenue yields in constant dollars are expected to increase roughly 2.5–3.5% year over year. Net cruise costs, excluding fuel per ALBD, are expected to grow 1.5–2.5% year over year on a constant dollar basis.

Based on the above factors, the company expects adjusted earnings per share in the range of $0.43 to $0.47.

Fiscal 2017 Guidance

The company anticipates full-year 2017 adjusted earnings per share in the range of $3.50 to $3.70.

Based on current booking trends, the company expects full-year 2017 net revenue yields in constant currency to be up approximately 3%.

Also, the company continues to expect net cruise costs for full-year 2017 to be up nearly 1%, excluding fuel per ALBD, on a constant currency basis.

Management noted that cumulative advance bookings for the remainder of 2017 are well ahead of the year-ago level at significantly higher prices.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There have been four revisions higher for the current quarter compared to four lower.

Carnival Corporation Price and Consensus

 

Carnival Corporation Price and Consensus | Carnival Corporation Quote

VGM Scores

At this time, Carnival's stock has an average Growth Score of 'C', however its Momentum is doing a bit better with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for momentum and to a lesser degree growth.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.

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