Shares of Carnival Corporation CCL hit a new 52-week high of $48.08 during the trading session on Mar 31 based on its impressive first-quarter 2015 results reported on Mar 27. Further, the company’s strong guidance for fiscal 2015 earnings caught investors’ attention, thereby giving boost to share price. In fact, share price of this cruise company rose 1.5% since then.
Carnival’s adjusted earnings of 20 cents per share easily surpassed the Zacks Consensus Estimate of 9 cents as well as management’s guidance range of 7–11 cents. Further, quarterly earnings were significantly higher than the prior year’s breakeven results.
Net revenue yields (in constant currency) increased 2% year over year, better than the company's guidance of net revenue yield (in constant dollar) range of flat to up 1%.
Such significant yields resulted in the company’s strong guidance both for the second quarter of 2015 and full-year 2015. Second-quarter net revenue yields in constant dollar are expected to increase 2–3% from the prior year. Based on current booking trends, the company increased its guidance for net revenue yields for 2015, on a constant dollar basis and expects it to be up approximately 3–4% year over year compared to the prior guidance of revenue yield growth of 2%.
Carnival also guided for strong earnings growth with adjusted earnings projected in the range of 11 to 15 cents, for the fiscal second quarter of 2015. Also, the company guided for 2015 adjusted earnings to be in the range of $2.30 to $2.50 per share.
It seems that Carnival is slowly scripting a turnaround after the Costa Concordia disaster hurt bookings. Its several brand-building efforts and other marketing promotions are yielding benefits. Carnival recently introduced a bevy of marketing initiatives. These attempts include introduction of new dining and bar concepts, hybrid model Wi-Fi at Sea, entertainment programs including the IMAX Theatre at Sea, an onboard brewery and SkyRide — a pedal powered aerial attraction — on its ship, to be launched in 2016.
These initiatives have yielded results as cumulative advance bookings for the first three quarters of 2015 are much better than the comparable period last year, at slightly higher prices. Since the beginning of 2015, booking volumes for the first three quarters of 2015 are also ahead of last year's levels. These trends reflect that the company’s brand building efforts have borne fruit.
A gradually improving U.S. economy and an improved macroeconomic environment in Europe, along with the positivity surrounding the stock led to most analysts revising their earnings estimates higher for the current year over the last 7 days.
Carnival currently carries a Zacks Rank #3 (Hold). Some stocks in the leisure and recreational industry that can be considered include Vail Resorts Inc. MTN, Live Nation Entertainment, Inc. LYV and The Marcus Corp. MCS. While Vail Resorts sports a Zacks Rank #1 (Strong Buy), Marcus and Live Nation carry a Zacks Rank #2 (Buy).
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