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Factors Setting the Tone for Carnival's (CCL) Q2 Earnings

Zacks Equity Research

Carnival Corporation CCL is likely to witness earnings decline, when it reports second-quarter fiscal 2019 numbers. However, the company came up with with an average trailing four-quarter beat of 7.1%. Furthermore, Carnival delivered a positive earnings surprise of 11.4% in the last reported quarter.

How Are Estimates Faring?

The Zacks Consensus Estimate for second-quarter earnings is pegged at 61 cents, which remained flat over the past 30 days. This reflects a 10.3% decline from 68 cents registered in the year-ago quarter. Revenues are expected to come in at $4,532 million, up 4% year over year.

Factors at Play

Carnival’s top line in second-quarter fiscal 2019 is likely to be driven by strength in passenger tickets, and onboard and other as well as tour and other businesses. However, earnings in the quarter are likely to hurt by higher costs.

Passenger Tickets revenues are expected to increase year over year, courtesy of solid bookings. The Zacks Consensus Estimate for the segment’s second-quarter revenues is pegged at $3,246 million, implying a 1.7% improvement from the year-ago reported figure. In the fiscal first quarter, passenger tickets revenues increased 1.6% year over year.

Meanwhile, Onboard and Other revenues, which witnessed a 35% gain in second-quarter fiscal 2018, are anticipated to keep the trend alive. The Zacks Consensus Estimate for the segment’s revenues is pegged at $1,239 million, indicating 10.4% growth from the prior-year reported figure. The upside is expected to be driven by higher onboard spending by guests.
However, the consensus estimate for net revenue yield in the second quarter is likely to decrease 2.3% year over year, following a 0.5% increase in the last reported quarter.

Notably, Carnival has adopted a strategy to grow beyond its familiar itineraries and capitalize on new markets. The Asian source market for cruises is expected to grow steadily as it becomes more consumer-driven. Carnival is especially optimistic about growth prospects of the Japanese and Australian markets.

Carnival Corporation Price and EPS Surprise

Carnival Corporation Price and EPS Surprise

What Does the Zacks Model Say?

Our proven model does not conclusively show that Carnival is likely to beat earnings estimates in second-quarter fiscal 2019. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Carnival has an Earnings ESP of -0.70% and a Zacks Rank #3, which make surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are some Consumer Discretionary stocks that according to our model have the right combination of elements to post an earnings beat in the upcoming releases.

BJ's Wholesale Club Holdings, Inc. BJ, Las Vegas Sands Corp. LVS and Marriott Vacations Worldwide Corporation VAC, each has a Zacks Rank #3 and an Earnings ESP of +0.27%, +7.28% and +4.41%, respectively.

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Click to get this free report Las Vegas Sands Corp. (LVS) : Free Stock Analysis Report Marriot Vacations Worldwide Corporation (VAC) : Free Stock Analysis Report Carnival Corporation (CCL) : Free Stock Analysis Report BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research