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Carnival (CCL) Q4 Earnings Lag, Stock Up on Strong FY20 View

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Carnival Corporation (CCL - Free Report) reported better-than-expected fourth-quarter fiscal 2019 (ended Nov 30, 2019) results. Both the top and bottom lines surpassed the Zacks Consensus Estimate. The stock grew nearly 5% in the pre-market trading session, as the company is at record booked occupancy levels for fiscal 2020 and provided strong guidance.

In the quarter under review, it reported adjusted earnings of 62 cents per share, missing the Zacks Consensus Estimate of 70 cents by 21.6% and declining 11.4% year over year. Revenues of $4.78 billion outpaced the consensus mark of $4.6 million by 3.8% and increased 6.7% year over year. This upside can be attributed to strength in passenger tickets, onboard and other, as well as tour and other businesses.

On a constant-currency basis, net revenue yields fell 1.8% year over year. The metric was expected to decline 2-3%. Net on-board and other yields increased 0.9% in constant currency.


Carnival Corporation Price, Consensus and EPS Surprise


Segmental Revenues

Carnival generates revenues from the following businesses: Passenger Tickets, Onboard and Other, as well as Tour and Other. Revenues at the Passenger Tickets business segment increased 2% year over year to $3,171 million. Onboard and Other revenues totaled $1,520 million, up 29.9% year over year. Tour and Other revenues rose 82% year over year to $91 million.


Net cruise costs (in constant dollar) per available lower berth day (ALBD), excluding fuel, increased 2.6% from the prior-year quarter. However, the reported figure was better than expected due to cost improvements realized during the quarter and the timing of expenses between quarters. Gross cruise costs (including fuel) per ALBD, in current dollars, rose 6.9% from the year-ago quarter.

Balance Sheet

Carnival exited the fiscal fourth quarter with cash and cash equivalents of approximately $518 million, down from $982 million as of Nov 30, 2018. Trade and other receivables summed $444 million, up from $358 million as of Nov 30, 2018. Long-term debt amounted to approximately $9,675 million.

Cash from operations totaled $1,062 million in the quarter under review. Carnival’s capital expenditure was $1,981 million. It paid out dividend worth $346 million during the quarter.

Fiscal 2020 Guidance

Carnival expects fiscal 2020 adjusted EPS in the range of $4.30-$4.60. Adjusted earnings of $4.40 per share were reported the prior-year quarter. The company expects Voyage disruptions due to weather, a ship delivery delay and U.S. government's policy change on travel to Cuba to impact fiscal 2020 earnings by 12-17 cents. The Zacks Consensus Estimate for earnings for the fiscal year is pegged at $4.42.

In constant currency, net revenue yields are expected to be down nearly 1.5% year over year. Also, net cruise costs (excluding fuel) per ALBD are expected to increase 5% from a year ago, with capacity growth of 6.6% in constant currency.

Zacks Rank

Carnival, which shares space with SeaWorld Entertainment, Inc. SEAS, Cedar Fair, L.P. FUN and Studio City International Holdings Limited MSC in the same industry, currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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