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Carnival (CCL) Q3 Earnings & Revenues Surpass Estimates

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Carnival Corporation (CCL - Free Report) reported better-than-expected third-quarter fiscal 2018 results. Earnings came in at $2.36 per share, which outpaced the Zacks Consensus Estimate of $2.31 and improved 3.1% year over year.

Revenues of $5,836 million exceeded the consensus mark by $5,816 million and increased 5.8% year over year. This year-over-year top-line improvement can be attributed strength in passenger tickets, onboard and other as well as tour and other businesses.

Net revenue yields rose 2.9% year over year on a constant-currency basis. The upswing was primarily driven by higher net ticket, and net on-board and other yields that increased 2.2% and 5.1%, respectively, in constant currency.

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

However, shares of Carnival decreased nearly 8% in pre-market trading session as the company’s fourth-quarter guidance hurt investors sentiment.

Segmental Revenues

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 5.2% year over year to $4,353 million. Onboard and Other revenues totaled $1,316 million, up 7.6% year over year. Tour and Other revenues rose 8.4% year over year to $167 million.

Expenses

Net cruise costs (in constant dollar) per available lower berth day (ALBD), excluding fuel, improved 2.7% and were better than the June guided range of 3-4% increase. Gross cruise costs (including fuel) per ALBD in current dollars decreased 2.6%.

Carnival Corporation Price, Consensus and EPS Surprise

Balance Sheet

Carnival exited the third quarter with cash and cash equivalents of approximately $526 million, up from $395 million as of Nov 30, 2017. Trade and other receivables summed $366 million, up from $312 million in the fourth quarter of fiscal 2017. Long-term debt amounted to  approximately $8,297 million.

Cash from operations totaled $1,349 million in the quarter under review. Carnival had spent $583 million on capital expenditures and $356 million on dividends in the same period.

Fourth-Quarter 2018 Guidance

Fiscal fourth-quarter 2018 net revenue yields, in constant dollars, are anticipated to increase in the band of 1.5-2.5% year over year. Net cruise costs, excluding fuel per ALBD, are expected to decline in the range of 1-2% from the prior-year figure, on a constant-dollar basis.

Based on the above factors, Carnival expects adjusted earnings per share in the range of 65 cents-69 cents. Currently, the Zacks Consensus Estimate for fourth-quarter fiscal 2018 earnings is pegged at 72 cents.

Fiscal 2018 Guidance

Carnival riased fiscal 2018 adjusted earnings per share guidance to the range of $4.21-$4.25 from $4.15-$4.25 projected earlier. The company had reported earnings of $3.82 per share in fiscal 2017.

Based on current booking trends, the company expects fiscal 2018 net revenue yields (in constant currency) to be up approximately 3.5% year over year compared with the prior guidance of up nearly 3%. Also, net cruise costs (in constant dollar) per ALBD, excluding fuel, for fiscal 2018 are anticipated to be up nearly 1.5% year over year.

Management noted that cumulative advance bookings for the first half of fiscal 2019 are ahead of the previous year at higher prices.

Zacks Rank & Key Picks

Carnival currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the leisure space are Callaway Golf Company (ELY - Free Report) , Johnson Outdoors Inc. (JOUT - Free Report) and Malibu Boats, Inc. (MBUU - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Callaway Golf reported better-than-expected earnings in the trailing four quarters, with an average beat of 68.3%.

Johnson Outdoors’ earnings surpassed the consensus mark in the preceding four quarters.

Malibu Boats has an impressive long-term earnings growth rate of 15%.

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