Back to top

Image: Bigstock

Carnival's (CCL) Q4 Earnings to Reflect Strong Bookings Trend

Read MoreHide Full Article

Carnival Corporation (CCL - Free Report) is slated to release fiscal fourth-quarter 2017 results on Dec 19, before the market opens.

Carnival’s revenues are expected to perform strongly in the to-be-reported quarter on a year-over-year basis. However, earnings are likely to be hurt by continuous investments and ongoing impacts of hurricanes and typhoons.

Notably, shares of Carnival have rallied 26.6% so far this year, outperforming the industry’s growth of 25.8%.

Here are the expectations in detail.

All Revenue Segments to Grow on Carnival’s Efforts to Drive Demand

Carnival earns revenues from its Passenger Tickets business, Onboard and Other as well as Tour and Other segments, all of which are expected to perform strongly in the to-be-reported quarter on a year-over-year basis.

Passenger Tickets revenues are expected to increase year over year driven by strong pricing on closing bookings on both sides of the Atlantic. The Zacks Consensus Estimate for this segment’s revenues is pegged at $3.04 billion, reflecting a year-over-year increase of 6%. In the third quarter, passenger tickets revenues increased 8.8% year over year.

Tour and Other revenues are likely to improve driven by the current strength in bookings, particularly in the Caribbean, Alaska, Europe, Asia and Australia along with favorable pricing trends. The Zacks Consensus Estimate for this segment’s revenues is pegged at $41.4 million, reflecting a year-over-year increase of 23.9%. Revenues from this segment increased 4.1% year over year in the third quarter.

Onboard and Other revenues will carry on the momentum of the third quarter (up 6.7% year over year), the segment is anticipated to record improvement in the quarter. Growth will be driven by the company’s ongoing initiatives to increase revenues.

These include offering all-inclusive spa packages, beverage packages, and specialty restaurants and strengthening onboard bar and casino programs along with using various marketing and promotional tools. The Zacks Consensus Estimate for onboard and other segment revenues is pegged at $1.09 billion, reflecting a year-over-year increase of 6.2%.

Strength across all segments will contribute significantly toward year-over-year growth of Carnival’s total revenues, the Zacks Consensus Estimate for which is currently pegged at $4.15 billion, representing an increase of 5.8%.

Carnival Corporation Revenue (TTM)

Net Revenue Yields to Benefit from Higher Net ticket, Net On-board and Other Yields

While ticket yields are likely to be driven by the Carnival’s deployment of North American brands in Caribbean, Europe and Alaska; net on-board and other yields will see strengths on both sides of the Atlantic.

The Zacks Consensus Estimate for net revenue yields is pegged at $165 million, reflecting a year-over-year increase of 3.8%. This metric increased 5.1% year over year in the third quarter.

Occupancy Percentage to be Driven by Improved Guest Experiences

This metric is antcipated to go up on year-over-year basis driven by the increasing efforts to improve guest experiences and global consideration of cruise. The Zacks Consensus Estimate is pegged at 104%, reflecting a year-over-year increase of 1%. This metric stayed more or less flat year over year in the third quarter.

Investments and Weather Impacts to Hurt EPS

The Zacks Consensus Estimate for EPS is pegged at 50 cents, reflecting year-over-year decrease by 16% year over year. The expected decrease can be attributable to increased investments in environmental and other areas, higher operating cost in Australia, rise in net cruise cost excluding fuel and additional expenses resulting from cancelled voyages due to hurricanes and typhoons.

In the third quarter, the company’s adjusted earnings per share increased 20% year over year.

Our Model Doesn’t Suggest a Beat

Please note that according to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Carnival has a Zacks Rank #3 and an Earnings ESP of -4.48%, a combination that suggests that the companyis unlikely to beat estimates.

Stocks to Consider

Here are some companies that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Shake Shack, Inc. (SHAK - Free Report) has an Earnings ESP of +28.95% and a Zacks Rank #3. The company is expected to report results on Mar 7, 2018. You can see the complete list of today’s Zacks #1 Rank stocks here.

Buffalo Wild Wings, Inc. has an ESP of +7.16% and a Zacks Rank #3. The company is expected to announce results on Feb 6, 2018.

McDonald’s Corporation (MCD - Free Report) has an Earnings ESP of +0.22% and a Zacks Rank #3. The company is expected to report results on Jan 22, 2018.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Carnival Corporation (CCL) - free report >>

McDonald's Corporation (MCD) - free report >>

Shake Shack, Inc. (SHAK) - free report >>

Published in