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Carnival's (CCL) Q3 Earnings: Ticket Revenues Holds the Baton

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Carnival Corporation (CCL - Free Report) is scheduled to report third quarter of fiscal 2018 results on Sep 27. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 13.3%. Also, it has an average four-quarter positive earnings surprise of 16.1%.

How Are Estimates Faring?

Let’s look at the estimate revision trend in order to get a clear picture of what analysts are thinking about Carnival prior to the earnings release. For the to-be-reported quarter, the Zacks Consensus Estimate is pegged at $2.30, flat over the past 30 days. This reflects a gain of 0.4% from $2.29 registered in the year-ago quarter. Revenues are expected to come in at $5,806 million, up 5.3% year over year.

Factors at Play

In the fiscal third quarter, Carnival’s results are likely to be driven by an increase in passenger ticket revenues as well as Onboard and Other revenues.

Passenger Tickets revenues are expected to increase year over year, courtesy of strength in bookings particularly in the Caribbean, Alaska, Europe, Asia and Australia along with robust pricing trends for 2018. The Zacks Consensus Estimate for the segment’s third-quarter revenues is pegged at $4,355 million, reflecting a year-over-year increase of 5.2%. In the second quarter, passenger tickets revenues improved 11.2% year over year.

Meanwhile, Onboard and Other revenues, which witnessed a gain of 8.3% in second-quarter fiscal 2018, are anticipated to keep the trend alive. The Zacks Consensus Estimate for the segment’s revenues is pegged at $1,290 million, reflecting a year-over-year increase of 5.5%. The upside is expected to be driven by higher onboard spending by guests.

Tour and Other revenues are also expected to increase, given robust booking trends. The Zacks Consensus Estimate is pegged at $184 million, reflecting a year-over-year rise of 19.5%.

Per the consensus estimate, net revenue yield is likely to improve 3.3% year over year in the third quarter, following the 4.8% increase in the last reported quarter. The upside can be attributed to higher net ticket, and net on-board and other yields. The company expects fiscal third-quarter 2018 net revenue yields, in constant dollars, to improve in the band of 1.5-2.5% year over year.

Carnival Corporation Price, Consensus and EPS Surprise

Our Model Suggests a Beat

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Carnival has an Earnings ESP of +0.05% and a Zacks Rank #3, a combination that suggests that the company is likely to beat estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are some leisure stocks that according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Royal Caribbean Cruises Ltd. (RCL - Free Report) , Norwegian Cruise (NCLH - Free Report) and Polaris Industries Inc. (PII - Free Report) , each has a Zacks Rank #3 and an Earnings ESP of +0.47%, +1.02% and +0.32%, respectively.

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