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Carnival (CCL) Stock Down 11% on Soft Q3 Preliminary Results

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Carnival Corporation & Plc (CCL - Free Report) reported preliminary third-quarter 2020 financial numbers. Following the preliminary results, the company’s shares declined nearly 11% yesterday.

Arnold Donald, president and CEO, said “Just six months after we paused cruise operations across our global fleet, this past weekend, we successfully completed our first seven day cruise on our Italian brand Costa. Soon a second of our nine World's Leading Cruise Lines' brands will resume guest operations, our German sourced brand AIDA.”

Preliminary Q3 Results

For third-quarter 2020, the company expects GAAP net loss of $(2.9) billion, which includes $0.9 billion of non-cash impairment charges. Moreover, adjusted net loss in the quarter is likely to be $(1.7) billion.

Moreover, the company’s monthly cash burn in the quarter was $770 million, in line with the company’s expectation. In fourth-quarter 2020, the company anticipates monthly cash burn to be nearly $530 million. As of Aug 31, 2020, the company’s cash and cash equivalent totaled $8.2 billion.

The company anticipates non-new build capital expenditures during fourth-quarter 2020 to be nearly $130 million.

Recommencement of Operations & Guest Bookings Update

Due to the pandemic, the company paused its operations in mid-March. However, it restarted limited guest operations on Sep 6, 2020, with Costa Cruises' ("Costa") successful voyage visiting five destinations in Italy. Carnival will also operate its other cruises with limited operations. The company’s AIDA cruises will sail during the fall of 2020.

The company said bookings for second half of 2021 are at the higher end of the historical range and identical to where booking positions were in 2018 for the second half of 2019. The company continues to accept bookings for 2021 and 2022.

Due to the current scenario, the company is unable to anticipate when the entire cruises will return to normal operations. Carnival has refrained from providing earnings guidance owing to the same.

So far this year, shares of the company have plummeted 68.6% compared with the industry’s decline of 41.4%.

Carnival, which shares space with Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) and Royal Caribbean Cruises Ltd. (RCL - Free Report) , has a Zacks Rank #5 (Strong Sell) at present.

A Key Pick

A better-ranked stock in the leisure space is Twin River Worldwide Holdings, Inc. (TRWH - Free Report) , which carries a Zacks Rank # 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Twin River 2021 earnings are expected to surge 273.5%.

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