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Carnival (CCL) Beats on Q1 Earnings, Lifts FY17 Guidance

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Carnival Corporation (CCL - Free Report) 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 38 cents outpaced the Zacks Consensus Estimate of 35 cents by 8.6% and also surpassed the guided range of 31 cents to 35 cents. 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 on the back of 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 just 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%.

Carnival Corporation Price, Consensus and EPS Surprise

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 43 cents to 47 cents. Meanwhile, the Zacks Consensus Estimate for earnings stands at 48 cents per share.

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, excluding fuel per ALBD, on a constant currency basis, for full-year 2017 to be up nearly 1%.

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

Zacks Rank & Stocks to Consider

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

Here are some better-ranked stocks in the Leisure and Recreation Services space:

The Marcus Corp. (MCS - Free Report) sports a Zacks Rank #1. Its long-term growth estimate stands at 15% while the industry’s average is 12.4%.

Royal Caribbean Cruises Ltd. (RCL - Free Report) carries a Zacks Rank #2 (Buy). Its current quarter and current year earnings estimates have moved up 22.7% and 3.7% respectively, over the past two months.

Reading International, Inc. (RDI - Free Report) is another Zacks Rank #2 company whose current year earnings estimate has moved up 12.2% in the past month.

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