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Carnival (CCL) Banks on Strategic Initiatives for Growth
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Carnival Corporation (CCL - Free Report) is well poised to gain from burgeoning demand for cruise travel, addition of new ships to its fleet and current strength in its bookings. Further, its strategy of growing beyond familiar itineraries and capitalizing on rapidly growing markets bode well. However, rising net cruise costs is a concern for the company.
Factors Driving Growth
Carnival continues to introduce flagships to generate additional demand. During the second quarter of 2018, the company launched Carnival Horizon (belonging to Carnival Cruise Line brand) and Seabourn Ovation (Seabourn). Meanwhile, AIDAnova (AIDA Cruises) and ms Nieuw Statendam (Holland America Line) are slated for a December launch. Carnival has 18 new ships scheduled to be included in its portfolio of leading global cruise brands between 2018 and 2022. During third-quarter fiscal 2018, the company finalized contracts for two more next generation ships powered by LNG to be delivered in 2023 and 2025. Order for LNG powered ship has increased to 11.
Notably, with these new launches, the company aims to formulate measured capacity growth over time that allows its global fleet to meet escalating demand for cruise vacations across the globe.
In third-quarter fiscal 2018, Carnival completed the rollout of the company’s new state-of-the-art revenue-management system — YODA. This revenue management system, which has been deployed across six of Carnival’s brands, will help the company to garner incremental revenues in the second half of 2019 and beyond. Carnival believes that implementation of YODA should also help it to squeeze additional yield by taking full advantage of the trade-offs.
By 2020, China’s cruise market is projected to grow to 4.5 million passengers, up from 1 million in 2015, per data from the Chinese Ministry of Transport. Also, by 2030, China is expected to become the world's second largest cruise market, after the United States. In a bid to expand its leading presence over there, Carnival has entered into a joint venture with the country’s largest shipbuilder — China State Shipbuilding Corporation — for ordering two new cruise ships with an option for four more.
Concerns
Carnival, which shares space with SeaWorld Entertainment, Inc. , Royal Caribbean Cruises Ltd. (RCL - Free Report) and Reading International, Inc. (RDI - Free Report) , has disappointed investors with its fourth-quarter fiscal 2018 outlook. The company expects fourth-quarter earnings to be in the range of 65-69 cents, lower than consensus estimate of 72 cents. Earnings in the fourth quarter might largely be impacted by strong dollar and rising fuel prices.
Rise in net cruise costs is an added concern for the company. During the third quarter, net cruise costs (in constant dollar) per available lower berth day (ALBD), excluding fuel, increased 2.7%. For fiscal 2018, the same metric (in constant dollar) per ALBD, excluding fuel, is anticipated to be up nearly 1.5% year over year.
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Carnival (CCL) Banks on Strategic Initiatives for Growth
Carnival Corporation (CCL - Free Report) is well poised to gain from burgeoning demand for cruise travel, addition of new ships to its fleet and current strength in its bookings. Further, its strategy of growing beyond familiar itineraries and capitalizing on rapidly growing markets bode well. However, rising net cruise costs is a concern for the company.
Factors Driving Growth
Carnival continues to introduce flagships to generate additional demand. During the second quarter of 2018, the company launched Carnival Horizon (belonging to Carnival Cruise Line brand) and Seabourn Ovation (Seabourn). Meanwhile, AIDAnova (AIDA Cruises) and ms Nieuw Statendam (Holland America Line) are slated for a December launch. Carnival has 18 new ships scheduled to be included in its portfolio of leading global cruise brands between 2018 and 2022. During third-quarter fiscal 2018, the company finalized contracts for two more next generation ships powered by LNG to be delivered in 2023 and 2025. Order for LNG powered ship has increased to 11.
Notably, with these new launches, the company aims to formulate measured capacity growth over time that allows its global fleet to meet escalating demand for cruise vacations across the globe.
In third-quarter fiscal 2018, Carnival completed the rollout of the company’s new state-of-the-art revenue-management system — YODA. This revenue management system, which has been deployed across six of Carnival’s brands, will help the company to garner incremental revenues in the second half of 2019 and beyond. Carnival believes that implementation of YODA should also help it to squeeze additional yield by taking full advantage of the trade-offs.
By 2020, China’s cruise market is projected to grow to 4.5 million passengers, up from 1 million in 2015, per data from the Chinese Ministry of Transport. Also, by 2030, China is expected to become the world's second largest cruise market, after the United States. In a bid to expand its leading presence over there, Carnival has entered into a joint venture with the country’s largest shipbuilder — China State Shipbuilding Corporation — for ordering two new cruise ships with an option for four more.
Concerns
Carnival, which shares space with SeaWorld Entertainment, Inc. , Royal Caribbean Cruises Ltd. (RCL - Free Report) and Reading International, Inc. (RDI - Free Report) , has disappointed investors with its fourth-quarter fiscal 2018 outlook. The company expects fourth-quarter earnings to be in the range of 65-69 cents, lower than consensus estimate of 72 cents. Earnings in the fourth quarter might largely be impacted by strong dollar and rising fuel prices.
Rise in net cruise costs is an added concern for the company. During the third quarter, net cruise costs (in constant dollar) per available lower berth day (ALBD), excluding fuel, increased 2.7%. For fiscal 2018, the same metric (in constant dollar) per ALBD, excluding fuel, is anticipated to be up nearly 1.5% year over year.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>