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Here's Why Investors Should Retain Carnival (CCL) Stock Now
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Carnival Corporation & plc (CCL - Free Report) will likely benefit from improved booking trends, marketing efforts and fleet-optimization initiatives. Also, focus on digitization efforts bode well. However, increased expenses are a concern.
Let us discuss why investors should retain the stock for the time being.
Key Growth Drivers
Shares of Carnival have gained 46.5% in the past six months compared with the industry’s 23.8% growth. The company has been benefitting from strong demand for cruising, bundled package offerings and pre-cruise sales. Also, it stated the benefits of increased advertising activities. During the fiscal first quarter, the company reported solid bookings for the North America and Australia (NAA) and Europe segments. The company stated that its NAA bookings curve mirrored peak 2019 levels, while the European recovery trajectory was more than 80% of 2019 levels. The company stated that its 2023 cumulative advanced booked position is at increased prices compared with 2019 levels. Total customer deposits as of Feb 28 were $5.7 billion compared with $5.1 billion reported in the previous quarter. The amount was higher than $4.9 billion reported in 2019. The company intends to focus on strategic deployments (closer to guests’ home itineraries) and shorter-duration cruises to reduce the friction of air travel and boost the booking environment.
Image Source: Zacks Investment Research
The company focuses on individual brand positioning and marketing efforts to attract new-to-cruise guests and increase loyalty. To this end, the company developed new brand affinity partnerships like Porsche Club of America (for Princess) to drive new-to-cruise demand. Also, it launched new marketing campaigns across multiple media channels, including new national and homeport-driven regional television (in most markets) to increase awareness.
Meanwhile, the company emphasized on redesigning websites to increase online traffic, improve conversion and achieve higher pre-cruise onboard sales. Also, it initiated the refinement of its onboard apps, digital performance marketing efforts, fine-tuning search engine optimization and testing new lead generation approaches to drive growth. The company remains optimistic and anticipates the initiatives to support growth and drive overall revenue generation over upcoming periods.
Carnival continues to focus on fleet optimization to drive growth. The company emphasized the exit of 26 less efficient ships from its fleet (since 2019). Although the initiative is likely to contract capacity growth to 3% in 2023 (from 2019 levels), the company remains optimistic about replacement with new ships and capitalization of pent-up demand. The company anticipates 50% of its capacity to comprise newly delivered, larger and more efficient ships, thereby making way for a return to profitability and improvement in its return on invested capital.
Concerns
The leisure industry is grappling with the coronavirus crisis and Carnival isn’t immune to the trend. China, which is closed to international travelers, will continue to hurt cruise operators. Moreover, the invasion of Ukraine and its resulting impacts (including supply chain disruptions, increased fuel prices and international sanctions) have adversely affected the company’s operations.
Carnival has been bearing the brunt of high expenses for quite some time. During the fiscal first quarter, adjusted cruise costs (excluding fuel per ALBD) increased 5.9% (in constant currency) from 2019 levels. The increase was primarily driven by a high inflationary environment and advertising investments. For second-quarter fiscal 2023, the company anticipates adjusted cruise costs to remain elevated on a sequential basis, buoyed by a rise in occupancy levels and dry-dock-related expenses.
Cedar Fair sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 64.5%, on average. The stock has declined 15.4% in the past year.
The Zacks Consensus Estimate for FUN’s 2024 sales and EPS indicates a rise of 2% and 6.5%, respectively, from the year-ago period’s estimated levels.
Hilton Grand Vacations currently sports a Zacks Rank #1. HGV has a trailing four-quarter earnings surprise of 12.1%, on average. Shares of HGV have declined 6.5% in the past year.
The Zacks Consensus Estimate for HGV’s 2023 sales and EPS indicates a rise of 7.1% and 10.8%, respectively, from the year-ago period’s levels.
Crocs sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 21.8%, on average. Shares of Crocs have increased 70.3% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 12.5% and 2.5%, respectively, from the year-ago period’s levels.
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Here's Why Investors Should Retain Carnival (CCL) Stock Now
Carnival Corporation & plc (CCL - Free Report) will likely benefit from improved booking trends, marketing efforts and fleet-optimization initiatives. Also, focus on digitization efforts bode well. However, increased expenses are a concern.
Let us discuss why investors should retain the stock for the time being.
Key Growth Drivers
Shares of Carnival have gained 46.5% in the past six months compared with the industry’s 23.8% growth. The company has been benefitting from strong demand for cruising, bundled package offerings and pre-cruise sales. Also, it stated the benefits of increased advertising activities. During the fiscal first quarter, the company reported solid bookings for the North America and Australia (NAA) and Europe segments. The company stated that its NAA bookings curve mirrored peak 2019 levels, while the European recovery trajectory was more than 80% of 2019 levels. The company stated that its 2023 cumulative advanced booked position is at increased prices compared with 2019 levels. Total customer deposits as of Feb 28 were $5.7 billion compared with $5.1 billion reported in the previous quarter. The amount was higher than $4.9 billion reported in 2019. The company intends to focus on strategic deployments (closer to guests’ home itineraries) and shorter-duration cruises to reduce the friction of air travel and boost the booking environment.
Image Source: Zacks Investment Research
The company focuses on individual brand positioning and marketing efforts to attract new-to-cruise guests and increase loyalty. To this end, the company developed new brand affinity partnerships like Porsche Club of America (for Princess) to drive new-to-cruise demand. Also, it launched new marketing campaigns across multiple media channels, including new national and homeport-driven regional television (in most markets) to increase awareness.
Meanwhile, the company emphasized on redesigning websites to increase online traffic, improve conversion and achieve higher pre-cruise onboard sales. Also, it initiated the refinement of its onboard apps, digital performance marketing efforts, fine-tuning search engine optimization and testing new lead generation approaches to drive growth. The company remains optimistic and anticipates the initiatives to support growth and drive overall revenue generation over upcoming periods.
Carnival continues to focus on fleet optimization to drive growth. The company emphasized the exit of 26 less efficient ships from its fleet (since 2019). Although the initiative is likely to contract capacity growth to 3% in 2023 (from 2019 levels), the company remains optimistic about replacement with new ships and capitalization of pent-up demand. The company anticipates 50% of its capacity to comprise newly delivered, larger and more efficient ships, thereby making way for a return to profitability and improvement in its return on invested capital.
Concerns
The leisure industry is grappling with the coronavirus crisis and Carnival isn’t immune to the trend. China, which is closed to international travelers, will continue to hurt cruise operators. Moreover, the invasion of Ukraine and its resulting impacts (including supply chain disruptions, increased fuel prices and international sanctions) have adversely affected the company’s operations.
Carnival has been bearing the brunt of high expenses for quite some time. During the fiscal first quarter, adjusted cruise costs (excluding fuel per ALBD) increased 5.9% (in constant currency) from 2019 levels. The increase was primarily driven by a high inflationary environment and advertising investments. For second-quarter fiscal 2023, the company anticipates adjusted cruise costs to remain elevated on a sequential basis, buoyed by a rise in occupancy levels and dry-dock-related expenses.
Zacks Rank & Key Picks
Carnival currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Cedar Fair, L.P. (FUN - Free Report) , Hilton Grand Vacations Inc. (HGV - Free Report) and Crocs, Inc. (CROX - Free Report) .
Cedar Fair sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 64.5%, on average. The stock has declined 15.4% in the past year.
The Zacks Consensus Estimate for FUN’s 2024 sales and EPS indicates a rise of 2% and 6.5%, respectively, from the year-ago period’s estimated levels.
Hilton Grand Vacations currently sports a Zacks Rank #1. HGV has a trailing four-quarter earnings surprise of 12.1%, on average. Shares of HGV have declined 6.5% in the past year.
The Zacks Consensus Estimate for HGV’s 2023 sales and EPS indicates a rise of 7.1% and 10.8%, respectively, from the year-ago period’s levels.
Crocs sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 21.8%, on average. Shares of Crocs have increased 70.3% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 12.5% and 2.5%, respectively, from the year-ago period’s levels.