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Carnival (CCL) Tops Q3 Earnings & Sales, Ups FY17 Guidance

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Carnival Corporation (CCL - Free Report) reported its third-quarter fiscal 2017 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
 
In fact, this Miami-based cruise company’s adjusted earnings per share of $2.29 outpaced the Zacks Consensus Estimate of $2.20 by 4.1% and  surpassed the guided range of $2.16 to $2.20. The bottom line also increased 19.3% year over year. It is to be noted that the company’s quarterly earnings exclude net unrealized losses on fuel derivatives.
 
Total revenue increased about 8% year over year to $5.5 billion on the back of Carnival’s efforts to drive demand. The top line also surpassed the Zacks Consensus Estimate of $5.4 billion.
 
Net revenue yields (in constant currency) increased 5.1% year over year, higher than the roughly 4% growth projected in June. Meanwhile, gross revenue yields increased 5.5%.
 
Carnival Corporation Price, Consensus and EPS Surprise
Segment Revenues
 
Carnival earns revenues from its Passenger Tickets business, Onboard and Other as well as Tour and Other segments.
 
Passenger Tickets: Passenger Tickets revenues increased 8.8% year over year to $4.14 billion.
 
Onboard and Other: Onboard and Other revenues were $1.22 billion, up 6.7% year over year.
 
Tour and Other: Revenues from this segment increased 4.1% year over year to $154 million.
 
Expenses
 
Net cruise costs (in constant dollar) per available lower berth day (ALBD), excluding fuel and impairments, inched up 0.2%, almost in line with the June guidance of approximately flat. Also, gross cruise costs (including fuel) per ALBD in current dollars, increased 12.4%.
 
Fourth-Quarter Fiscal 2017 View
 
Fiscal fourth-quarter 2017 net revenue yields in constant dollars are expected to increase in the band of 1.5-2.5% year over year. Net cruise costs, excluding fuel per ALBD, are anticipated to rise in the range of 6-7% from the prior year figure, on a constant dollar basis.
 
Based on the above factors, the company expects adjusted earnings per share in the range of 44 to 50 cents. Disruptions related to the series of storms are likely to reduce EPS by 10-12 cents in the fiscal fourth quarter.
 
Currently, the Zacks Consensus Estimate for earnings is pegged at 61 cents per share.
 
Fiscal 2017 Guidance
 
The company anticipates fiscal 2017 adjusted earnings per share in the range of $3.64 to $3.70 (previous projection was in the range of $3.60 to $3.70).
 
Based on current booking trends, the company expects fiscal 2017 net revenue yields in constant currency to be up approximately 4% (higher than previous expectation of 3.5%).
 
Also, the company continues to expect net cruise costs, excluding fuel per ALBD, on a constant currency basis for fiscal 2017, to be up nearly 2.5% (higher than previous expectation of 1.5%).
 
Management noted that cumulative advance bookings for the first half of next year are well ahead of the year-ago level at significantly higher prices.
 
Zacks Rank & Stocks to Consider
 
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 a similar space include ILG Inc. (ILG - Free Report) , Town Sports International Holdings, Inc. (CLUB - Free Report) and Callaway Golf Company (ELY - Free Report) , each holding a Zacks Rank #2 (Buy).
 
ILG, Town Sports and Callaway Golf have pulled off an average positive earnings surprise of 24.40%, 52.48% and 23.29%, respectively, in the trailing four quarters.
 
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