Carnival (NYSE: $CCL) released its third quarter earnings on Monday, before markets opened. Here are the results, and how they performed compared to projections.
Carnival Past Results
In the second quarter of the current fiscal year, Carnival reported an EPS of $0.11, beating forecasts by 1200% and above the previous year’s $0.31 loss. Revenue came in at $5.8 billion, beating estimates of $5.7 billion and a 17.7% increase YoY. Passenger cruise days, an important metric, were up 11.5% YoY to 24.3 million in Q2.
Carnival Beats Estimates In Q3 Results
Carnival beat revenue and earnings expectations for the third quarter of fiscal 2024. It reported revenue of $7.9 billion and earnings of $1.27, a significant increase from the $0.86 reported last year. Analysts expected revenue of $7.82 billion and an EPSof $1.15 per share. Carnival reported a record operating income of $2.2 billion, exceeding the 2023 level by $554 million.
Full Year Forecast
Carnival expects net yields to rise around 10.4% YoY and adjusted cruise costs, excluding fuel per ALBD, to increase by 3.5% compared to 2023. It expects a full-year adjusted EBITDA of around $6 billion, a 40% increase compared to last year. It also forecasts that return on invested capital (ROIC) will be around 10.5%, a 5% improvement compared to 2023.
Fourth Quarter Forecast
For the fourth quarter, Carnival expects net yields to increase 5% compared to Q42023, while adjusted cruise costs excluding fuel per ALBD are expected to rise 8% compared to Q4 last year. It expects an adjusted EBITDA of around $1.14 billion, a 20% improvement from Q423.
Carnival (CCL) Stock Performance
Carnival shares have remained flat year to date. However, over the past 12 months, it has outperformed the market, rising 35.12% compared to the 33.82% gains of the S&P 500 in the same period. CCL shares have picked up momentum over the past month, rising 12.1% compared to the 2.7% gain of the S&P 500 in the same period. Following the release of Q3 results, the stock fell 1.24% to $18.31 per share a few minutes to the opening bell.
Analysts remain cautiously optimistic regarding the future performance of Carnival (CCL), giving the shares a moderate buy rating. They forecast a wide range of price targets, with a high of $27, and a low of $15. Their average price forecast of $23 is a 24.06% upside based on the most recent closing price of $18.54.
Should You Buy, Sell, Or Hold CCL Shares?
Over the past four quarters, Carnival has demonstrated resilience, surpassing earnings estimates 100% of the by an average of 320.4%. The third quarter results were bolstered by sustained demand strength, felt optimization efforts, and new ships. Coupled with strong bookings, solid onboard spending, and the strength of customer deposits places it in a strong position looking ahead.
On the downside, high costs could impact Carnival’s bottom line going forward. Despite this challenge, Carnival’s future looks great, with a plan to launch its Celebration Key destination in 2025, which could boost revenue and improve operational efficiency.
Additionally, Carnival (CCL) has adopted an aggressive debt management strategy, and has been able to prepay $1.6 billion of its debt, cutting its net interest expenses going forward.
Overall, Carnival’s management has steered the company toward long-term success, which could include double-digit ROIC, a reduced carbon footprint, and sustained value creation for shareholders. As a result, adding CCL shares to your portfolio as part of a long-term investment strategy could potentially pay off.
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