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Can Carnival (CCL) Keep its Earnings Streak Alive in Q1?
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Cruise and vacation company Carnival Corporation (CCL - Free Report) is slated to release first-quarter fiscal 2017 results on Mar 28, before market opens. We expect the company to surpass expectations.
Last quarter, Carnival had posted a positive earnings surprise of 15.52%. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 17.14%.
Our proven model shows that Carnival is likely to beat on earnings because it has the perfect combination of the two key ingredients.
Zacks ESP:Earnings ESP for Carnival is +8.57%, because the Most Accurate estimate is pegged at 38 cents, while the Zacks Consensus Estimate stands at 35 cents. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Carnival currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. The combination of Carnival’s favorable Zacks Rank and positive Earnings ESP makes us reasonably confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Conversely, we caution against stocks with Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.
What is Driving the Better-than-Expected Earnings?
Along with the fiscal fourth-quarter 2016 results, the company had issued a guidance range of 31 cents to 35 cents for adjusted earnings per share in the fiscal first quarter of 2017. The company had factored in year-over-year growth in net revenue yields (constant dollars) in the band of 1.5–2.5% and roughly the same range increase in net cruise costs, while projecting its earnings per share.
In the fiscal third quarter, the company had launched the initial phase of its yield management system, which is expected to aid in driving incremental revenue yields 2017 onwards. In addition, Carnival predicts revenue yields to continue improving on the back of marketing initiatives and a better booking environment.
In fact, Carnival’s strategy to grow beyond its familiar itineraries and capitalize on new markets bodes well. Also, the company is confident about its fiscal first-quarter results to reflect growth in the Asian and Australian markets as well as expansion in relatively other untapped markets. Further, the launch of several new ships in a bid to form additional demand creation opportunities, bodes well for top-line growth.
Moreover, the company remains focused on its cost-containment efforts, including decreased fuel consumption, which are likely to aid the quarter’s margins.
However, negative currency translation and increased marketing expenses might hamper the quarter’s performance. Most firms expect a likely increase in fuel costs to weigh on the company’s profits. Meanwhile, the political and economic tensions in certain pockets of the world are expected to affect the company’s top line.
Other Stocks to Consider
Carnival is not the only company to look up this earnings season. Here are some other companies in the consumer discretionary sector to consider, as our model shows they also have the right combination of elements to post an earnings beat this quarter:
G-III Apparel Group, Ltd. (GIII - Free Report) has an Earnings ESP of +100% and a Zacks Rank #3.
DISH Network Corporation has an Earnings ESP of +1.43% and a Zacks Rank #3.
Snap-on Incorporated (SNA - Free Report) has an Earnings ESP of +1.71% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
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Can Carnival (CCL) Keep its Earnings Streak Alive in Q1?
Cruise and vacation company Carnival Corporation (CCL - Free Report) is slated to release first-quarter fiscal 2017 results on Mar 28, before market opens. We expect the company to surpass expectations.
Last quarter, Carnival had posted a positive earnings surprise of 15.52%. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 17.14%.
Carnival Corporation Price and EPS Surprise
Carnival Corporation Price and EPS Surprise | Carnival Corporation Quote
Why a Likely Positive Surprise?
Our proven model shows that Carnival is likely to beat on earnings because it has the perfect combination of the two key ingredients.
Zacks ESP: Earnings ESP for Carnival is +8.57%, because the Most Accurate estimate is pegged at 38 cents, while the Zacks Consensus Estimate stands at 35 cents. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Carnival currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. The combination of Carnival’s favorable Zacks Rank and positive Earnings ESP makes us reasonably confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Conversely, we caution against stocks with Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.
What is Driving the Better-than-Expected Earnings?
Along with the fiscal fourth-quarter 2016 results, the company had issued a guidance range of 31 cents to 35 cents for adjusted earnings per share in the fiscal first quarter of 2017. The company had factored in year-over-year growth in net revenue yields (constant dollars) in the band of 1.5–2.5% and roughly the same range increase in net cruise costs, while projecting its earnings per share.
In the fiscal third quarter, the company had launched the initial phase of its yield management system, which is expected to aid in driving incremental revenue yields 2017 onwards. In addition, Carnival predicts revenue yields to continue improving on the back of marketing initiatives and a better booking environment.
In fact, Carnival’s strategy to grow beyond its familiar itineraries and capitalize on new markets bodes well. Also, the company is confident about its fiscal first-quarter results to reflect growth in the Asian and Australian markets as well as expansion in relatively other untapped markets. Further, the launch of several new ships in a bid to form additional demand creation opportunities, bodes well for top-line growth.
Moreover, the company remains focused on its cost-containment efforts, including decreased fuel consumption, which are likely to aid the quarter’s margins.
However, negative currency translation and increased marketing expenses might hamper the quarter’s performance. Most firms expect a likely increase in fuel costs to weigh on the company’s profits. Meanwhile, the political and economic tensions in certain pockets of the world are expected to affect the company’s top line.
Other Stocks to Consider
Carnival is not the only company to look up this earnings season. Here are some other companies in the consumer discretionary sector to consider, as our model shows they also have the right combination of elements to post an earnings beat this quarter:
G-III Apparel Group, Ltd. (GIII - Free Report) has an Earnings ESP of +100% and a Zacks Rank #3.
DISH Network Corporation has an Earnings ESP of +1.43% and a Zacks Rank #3.
Snap-on Incorporated (SNA - Free Report) has an Earnings ESP of +1.71% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>