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Why Is Carnival (CCL) Down 11.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for Carnival (CCL - Free Report) . Shares have lost about 11.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Carnival due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Carnival Q2 Earnings and Revenues Miss Estimates

Carnival reported loss per share of $1.80, wider than the Zacks Consensus Estimate of a loss of $1.68. In the year-ago quarter, the company had reported loss per share of $3.30. Revenues amounted to $50 million, which fell short of the consensus mark of $129 million. The top line also declined sharply from the prior-year quarter’s figure of $740 million.

Liquidity and Cash Burn

Carnival ended the quarter with cash and cash equivalents of $9.3 billion. The company announced that it has enough liquidity to return to full operation. It further added that it will be pursuing refinancing opportunities to decrease interest expense and extend maturities.

Moreover, average monthly cash burn in the first half of 2021 totaled $500 million, compared with the previously anticipated figure of $550 million. The improvement was primarily driven by the timing of proceeds from ship sales and working capital changes.

Bookings Update

During the second quarter, booking volumes for all future cruises increased 45% compared with the prior quarter. The company stated that cumulative advanced bookings for full year 2022 are ahead of a very robust 2019 as of May 31, 2021. These bookings were achieved by negligeable advertising and marketing.

Meanwhile, total customer deposits as of May 31, 2021 amounted to $2.5 billion compared with $2.2 billion as of Feb 28, 2021. During the quarter, customer deposits on new bookings exceeded the impact of refunds.

2021 Outlook

The company refrained from providing earnings guidance for fiscal 2021 due to the pandemic. However, it expects phased resumption of cruise operations to have a material impact on all aspects of its business, including the company's liquidity, financial position and results of operations. Going forward, the company anticipates to report a net loss on both U.S. GAAP and adjusted basis for the third quarter and full year ending Nov 30, 2021.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, Carnival has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Carnival has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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