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Carnival (CCL) Beats on Q2 Earnings, Lowers EPS Guidance

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Carnival Corporation (CCL - Free Report) reported better-than-expected fiscal second-quarter 2018 results.

Earnings of 68 cents per share surpassed the Zacks Consensus Estimate of 60 cents by 13.3% and improved 30.8% year over year. Revenues of $4.4 billion outpaced the consensus mark by $4.3 billion and increased 4.8% year over year. This year-over-year growth in revenues is driven by strength in passenger tickets, onboard and other, as well as tour and other businesses.

Net revenue yields rose 4.8% year over year on a constant-currency basis. The upswing can be attributed to higher net ticket, and net on-board and other yields that increased 9.3% and 6.9%, respectively, in constant currency.

In the reported quarter, the company benefited from ongoing guest-experience efforts, along with marketing and public-relation programs that drove cruise ticket prices.

Carnival Corporation Price, Consensus and EPS Surprise

Let’s delve deeper into the numbers.

Revenues by Segments

Carnival generates revenues from Passenger Tickets business, Onboard and Other, as well as Tour and Other segments. Revenues at the Passenger Tickets business segment increased 11.2% year over year to $3.2 billion. Onboard and Other revenues totaled $1.1 billion, up 8.3% year over year. Tour and Other revenues increased 13.5% year over year to $42 million.


Net cruise costs (in constant dollar) per available lower berth day (ALBD), excluding fuel, increased 3.6% and were better than the March guided range of 4-5% increase. Gross cruise costs (including fuel) per ALBD in current dollars increased 8.8%.

Balance Sheet

Carnival exited the second quarter with cash and cash equivalents of approximately $1.1 billion, up from $395 million as of Nov 30, 2017. Trade and other receivables were $342 million, up from $312 million in the fourth quarter of fiscal 2017. Long-term debt was approximately $8.2 billion.

Cash from operations was around $1.02 billion. In the quarter under review, the company had spent $1.6 billion on capital expenditures and $323 million on dividends.

Third-Quarter 2018 Guidance

Fiscal third-quarter 2018 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 escalate in the range of 3-4% 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 $2.25-$2.29. Currently, the Zacks Consensus Estimate for earnings is pegged at $2.48 per share.

Fiscal 2018 Guidance

The company lowered fiscal 2018 adjusted earnings per share guidance to the range of $4.15-$4.25 from the previously guided range of $4.20-$4.40.

Based on current booking trends, the company expects fiscal 2018 net revenue yields, in constant currency, to be up approximately 3% compared with the previous year. Also, net cruise costs (in constant dollar) per ALBD, excluding fuel, for fiscal 2018 are anticipated to be up nearly 1% year over year, on a constant-currency basis.

Management noted that cumulative advance bookings for fiscal 2018 are in line with that of the year-ago level at higher prices.

Zacks Rank & Stocks to Consider

Currently, Carnival has a Zacks Rank #3 (Hold). Some better-ranked stocks in the leisure space include Lindblad Expeditions (LIND - Free Report) , Six Flags (SIX - Free Report) and RCI Hospitality (RICK - Free Report) . While Lindblad and Six Flags sport a Zacks Rank #1 (Strong Buy), RCI carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lindblad, Six Flags and RCI’s earnings for 2018 are expected to grow 155.6%, 33.3% and 52.5%, respectively.

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