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Why Is Carnival (CCL) Up 6.1% Since Last Earnings Report?

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It has been about a month since the last earnings report for Carnival (CCL - Free Report) . Shares have added about 6.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Carnival due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Carnival Q1 Earnings Beat Estimate

Carnival reported first-quarter fiscal 2019 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

In the quarter under review, earnings of 49 cents per share outpaced the Zacks Consensus Estimate of 44 cents but declined 5.8% year over year. Revenues came in at $4,673 million, which surpassed the consensus mark of $4,296 million and increased 10.4% year over year. This year-over-year improvement in the top line can be attributed strength in passenger tickets, and onboard and other as well as tour and other businesses.

On a constant-currency basis, net revenue yields rose 0.5% year over year. Higher net on-board and other yields that increased 3.1% in constant currency led to the uptick.

Segmental Revenues

Carnival generates revenues from the Passenger Tickets business, and Onboard and Other as well as the Tour and Other segments. Revenues at the Passenger Tickets business segment increased 1.6% year over year to $3,199 million. Onboard and Other revenues totaled $1,446 million, up 35% year over year. Tour and Other revenues rose 123.1% year over year to $29 million.

Expenses

Net cruise costs (in constant dollar) per available lower berth day (ALBD), excluding fuel, increased 0.8%. Gross cruise costs (including fuel) per ALBD, in current dollars, were up 11.1%.

Balance Sheet

Carnival exited the fiscal first quarter with cash and cash equivalents of approximately $649 million, down from $982 million as of Nov 30, 2018. Trade and other receivables summed $406 million, down from $358 million as of Nov 30, 2018. Long-term debt amounted to approximately $9,134 million.

Cash from operations totaled $1,116 million in the quarter under review. Carnival spent $2,129 million on capital expenditure and $348 million on dividends in the same period.

Second-Quarter Fiscal 2019 Outlook

Carnival expects second-quarter fiscal 2019 EPS to be 56-60 cents compared with adjusted earnings of 68 cents per share reported the prior-year quarter. The Zacks Consensus Estimate for second-quarter earnings is pegged at 72 cents. Net revenue yields are expected to be flat in constant currency. Net cruise costs (excluding fuel) per ALBD are expected to increase by roughly 1% compared with the prior-year figure, in constant currency.

Fiscal 2019 Guidance

Carnival expects fiscal 2019 EPS to be in the $4.35-$4.55 band, down from the prior estimate of $4.50-$4.80. The consensus estimate for the current year is pegged at $4.73.

The company expects full-year net cruise costs (excluding fuel) per ALBD to be up approximately 0.5%. Moreover, management continues to expect net cruise revenues to be up 5.5%, with capacity growth of 4.6% and higher net revenue yields by 1%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -14.68% due to these changes.

VGM Scores

Currently, Carnival has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Carnival has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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