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Earnings preview: Cruise booking to drive Carnival Q1 results

Leisure travel and cruise operator Carnival Corporation (CCL/CUK) is scheduled to report its earnings results for the first quarter of fiscal 2019 on Tuesday before the market opens. The results will be benefited by booking volumes that are likely to run significantly ahead of its higher capacity growth and net revenue yields expected to exceed last year’s record levels.

The bottom line is anticipated to be hurt by fuel, payroll and currency headwinds, which will offset streamlined operations. The results will also be hurt by unrealized gains and losses on fuel derivatives and other charges. Changes in fuel prices and in currency exchange rates are expected to lower earnings by $0.03 per share for the first quarter.

The company has been impacted by terrorism and geopolitical issues as well as macro uncertainties. However, booking trends remained strong for Carnival as credit and debit card data from Bank of America Merrill Lynch indicated cruise spending accelerating at a faster pace.

Analysts expect Carnival to post earnings of $0.44 per share on revenue of $4.31 billion for the first quarter. In comparison, during the previous year quarter, the company reported a profit of $0.52 per share on revenue of $4.23 billion. Majority of the analysts recommended a “strong buy” or “buy” rating while expecting the stock to reach $66.42 per share in the next 52 weeks.

Image Courtesy: Carnival

For the fourth quarter, the company reported a 10% decline in earnings as fuel, payroll and currency headwinds offset streamlined operations. Higher demand benefited the top line, which increased by 5% year-over-year. This was based on continued strength in underlying fundamentals.

For the first quarter, Carnival had expected constant currency net revenue yields to be flat with the previous year. Adjusted earnings were anticipated to be in the range of $0.40 to $0.44 per share. Net cruise costs excluding fuel per ALBD was predicted to rise by about 2%.

For fiscal 2019, the company had predicted net revenue yields in constant currency to be up about 1% compared to the year-ago. Constant currency net cruise revenues were predicted to be up about 5.5%, with capacity growth of 4.6%. Adjusted earnings were anticipated to be in the range of $4.50 to $4.80 per share.

Shares of Carnival ended Friday’s regular session down 1.47% at $56.42 on the NYSE. The stock has fallen over 13% in the past year while it has risen over 19% in the past three months.

 

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