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Higher Ticket Revenues to Drive Carnival's (CCL) Q3 Earnings

Zacks Equity Research

Carnival Corporation CCL is likely to witness earnings growth, when it reports third-quarter fiscal 2019 results. In the last reported quarter, Carnival delivered a positive earnings surprise of 11.4%. Furthermore, the company came up with with an average trailing four-quarter bottom-line beat of 7.1%.

How Are Estimates Faring?

The Zacks Consensus Estimate for third-quarter earnings is pegged at $2.53, which remained flat over the past 30 days. This reflects a 7.2% increase from $2.36 registered in the year-ago quarter. Revenues are expected to come in at $6,178 million, up 5.9% year over year.

Factors at Play

In the quarter under review, Carnival is likely to gain from robust performances of the company’s Passenger Tickets business, and the Onboard and Other as well as the Tour and Other segments.

Meanwhile, Carnival continues to enjoy ticket price improvements in both its North American and EAA brands, with particularly robust ticket price improvements in its core Caribbean deployment. Furthermore, the company is consistently providing a boost to revenue yield growth by creating demand in excess of measured capacity growth through its ongoing guest experience, marketing and public relations effort.

Passenger tickets revenues are expected to increase year over year, courtesy of solid bookings. The Zacks Consensus Estimate for the segment’s third-quarter revenues is pegged at $4,480 million, implying a 2.9% improvement from the year-ago reported figure. In the fiscal first and second quarter, passenger tickets revenues increased 1.6% and 2% year over year, respectively.

Onboard and Other revenues, which witnessed a 35% and 34.6% gain in first and second-quarter fiscal 2018, are anticipated to keep the trend alive. The Zacks Consensus Estimate for the segment’s revenues is pegged at $1,549 million, indicating 17.7% growth from the prior-year reported figure. The upside is expected to be driven by higher onboard spending by guests.

However, increase in net cruise costs remains a concern. During the third quarter of fiscal 2019, net cruise costs (excluding fuel), per ALBD, are expected to increase by 0.5-1.5% compared with the prior-year quarter, in constant currency. During fiscal 2019, the company expects full-year net cruise costs (excluding fuel), per ALBD, to be up approximately 0.7% compared with prior guidance of 0.5% increase.

What Does the Zacks Model Say?

Our proven model does not show that Carnival is likely to beat earnings estimates in third-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 -0.20% and a Zacks Rank #3, which make surprise prediction difficult.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Carnival Corporation Price and EPS Surprise

Carnival Corporation Price and EPS Surprise

Carnival Corporation price-eps-surprise | Carnival Corporation Quote

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, Casars Entertainment Corporation CZR and Monarch Casino & Resort, Inc. MCRI, all carrying a Zacks Rank #3, have an Earnings ESP of +1.10%, +133.33% and +4.13%, respectively.

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Caesars Entertainment Corporation (CZR) : Free Stock Analysis Report
 
Monarch Casino & Resort, Inc. (MCRI) : Free Stock Analysis Report
 
Carnival Corporation (CCL) : Free Stock Analysis Report
 
BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
 
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