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Here's Why Investors Should Retain Carnival (CCL) Stock Now
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Shares of Carnival Corporation & plc (CCL - Free Report) have gained 36.7% in the past six months compared against the industry’s decline of 1.2%. The company has been benefitting from strong booking, marketing efforts and fleet-optimization initiatives. Also, the focus on digitization efforts bodes well. However, increased expenses are a concern.
Let us discuss why investors should retain the stock for the time being.
Key Growth Drivers
The company gains from solid booking momentum. During the fiscal third quarter, the company reported solid bookings for the North America and Australia (NAA) and Europe segments. Strong demand, bundled package offerings and pre-cruise sales backed the upside. Also, it stated the benefits of increased advertising activities. During the quarter, the company's NAA bookings curve is further out than 2019, while the European bookings are back to 2019. The company stated that its fiscal 2024 cumulative advanced booked position exceeds the upper bound of the historical range and at higher pricing compared with 2019 levels.
Image Source: Zacks Investment Research
The company has been benefiting from solid demand for cruising, a strong pricing environment and capacity-generation initiatives. Also, it stated the benefits of new marketing campaigns and demand-generation efforts. During the third quarter of fiscal 2023, the company's Web visits came in at 135% of 2019 levels. Paid search and natural search were up 150%, and 185% from 2019 levels. Moving forward, the company emphasizes commercial enhancement activities, advertising investments and lead generation efforts to support demand-building momentum in the upcoming periods.
Increased focus on new ship additions bodes well. Throughout 2022, the company delivered new flagships for five of its brands, including Carnival Celebration, AIDAcosma, Costa Toscana, and Discovery Princess as well as Seabourn Venture. All of these ships were purpose-built to generate higher returns. In the second quarter of fiscal 2023, the company had 14 newly delivered ships, comprising about 25% of its capacity. It announced the addition of Carnival Venezia to its Carnival Cruise Line fleet. In the third quarter of fiscal 2023, the company reported the delivery of the Seabourn luxury expedition ship.
Meanwhile, the company emphasized redesigning websites to increase online traffic, improve conversion and achieve higher pre-cruise onboard sales. Also, it initiated the refinement of its onboard apps, digital performance marketing efforts, fine-tuning search engine optimization and testing new lead generation approaches to drive growth. The company remains optimistic and anticipates the initiatives to support growth and drive overall revenue generation over upcoming periods.
Concerns
Carnival has been bearing the brunt of high expenses for quite some time. During the fiscal third quarter, adjusted cruise costs (excluding fuel per ALBD) increased 15% (in constant currency) from third-quarter 2019 levels. The increase was primarily driven by higher dry-dock-related expenses and advertising investments. For fourth-quarter fiscal 2023, the company anticipates adjusted cruise costs to increase in the range of 10-11% (Constant Currency basis) from 2019 levels.
Zacks Rank & Key Picks
Carnival currently carries a Zacks Rank #3 (Hold).
Live Nation Entertainment, Inc. (LYV - Free Report) sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 34.6% on average. Shares of LYV have increased 6.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LYV’s 2023 sales and EPS indicates a rise of 21.3% and 57.8%, respectively, from the year-ago period’s levels.
Hilton Worldwide Holdings Inc. (HLT - Free Report) carries a Zacks Rank #2 (Buy). HLT has a trailing four-quarter earnings surprise of 12.5% on average. Shares of the company have gained 21.5% in the past year.
The Zacks Consensus Estimate for HLT’s 2023 sales and EPS indicates a rise of 14.8% and 23.7%, respectively, from the year-ago period’s levels.
OneSpaWorld Holdings Limited (OSW - Free Report) currently carries a Zacks Rank #2. OSW has a trailing four-quarter earnings surprise of 42.6% on average. Shares of OSW have increased 33.6% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 44.5% and 117.9%, respectively, from the year-ago period’s levels.
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Here's Why Investors Should Retain Carnival (CCL) Stock Now
Shares of Carnival Corporation & plc (CCL - Free Report) have gained 36.7% in the past six months compared against the industry’s decline of 1.2%. The company has been benefitting from strong booking, marketing efforts and fleet-optimization initiatives. Also, the focus on digitization efforts bodes well. However, increased expenses are a concern.
Let us discuss why investors should retain the stock for the time being.
Key Growth Drivers
The company gains from solid booking momentum. During the fiscal third quarter, the company reported solid bookings for the North America and Australia (NAA) and Europe segments. Strong demand, bundled package offerings and pre-cruise sales backed the upside. Also, it stated the benefits of increased advertising activities. During the quarter, the company's NAA bookings curve is further out than 2019, while the European bookings are back to 2019. The company stated that its fiscal 2024 cumulative advanced booked position exceeds the upper bound of the historical range and at higher pricing compared with 2019 levels.
Image Source: Zacks Investment Research
The company has been benefiting from solid demand for cruising, a strong pricing environment and capacity-generation initiatives. Also, it stated the benefits of new marketing campaigns and demand-generation efforts. During the third quarter of fiscal 2023, the company's Web visits came in at 135% of 2019 levels. Paid search and natural search were up 150%, and 185% from 2019 levels. Moving forward, the company emphasizes commercial enhancement activities, advertising investments and lead generation efforts to support demand-building momentum in the upcoming periods.
Increased focus on new ship additions bodes well. Throughout 2022, the company delivered new flagships for five of its brands, including Carnival Celebration, AIDAcosma, Costa Toscana, and Discovery Princess as well as Seabourn Venture. All of these ships were purpose-built to generate higher returns. In the second quarter of fiscal 2023, the company had 14 newly delivered ships, comprising about 25% of its capacity. It announced the addition of Carnival Venezia to its Carnival Cruise Line fleet. In the third quarter of fiscal 2023, the company reported the delivery of the Seabourn luxury expedition ship.
Meanwhile, the company emphasized redesigning websites to increase online traffic, improve conversion and achieve higher pre-cruise onboard sales. Also, it initiated the refinement of its onboard apps, digital performance marketing efforts, fine-tuning search engine optimization and testing new lead generation approaches to drive growth. The company remains optimistic and anticipates the initiatives to support growth and drive overall revenue generation over upcoming periods.
Concerns
Carnival has been bearing the brunt of high expenses for quite some time. During the fiscal third quarter, adjusted cruise costs (excluding fuel per ALBD) increased 15% (in constant currency) from third-quarter 2019 levels. The increase was primarily driven by higher dry-dock-related expenses and advertising investments. For fourth-quarter fiscal 2023, the company anticipates adjusted cruise costs to increase in the range of 10-11% (Constant Currency basis) from 2019 levels.
Zacks Rank & Key Picks
Carnival currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
Live Nation Entertainment, Inc. (LYV - Free Report) sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 34.6% on average. Shares of LYV have increased 6.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LYV’s 2023 sales and EPS indicates a rise of 21.3% and 57.8%, respectively, from the year-ago period’s levels.
Hilton Worldwide Holdings Inc. (HLT - Free Report) carries a Zacks Rank #2 (Buy). HLT has a trailing four-quarter earnings surprise of 12.5% on average. Shares of the company have gained 21.5% in the past year.
The Zacks Consensus Estimate for HLT’s 2023 sales and EPS indicates a rise of 14.8% and 23.7%, respectively, from the year-ago period’s levels.
OneSpaWorld Holdings Limited (OSW - Free Report) currently carries a Zacks Rank #2. OSW has a trailing four-quarter earnings surprise of 42.6% on average. Shares of OSW have increased 33.6% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 44.5% and 117.9%, respectively, from the year-ago period’s levels.