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Top Cruise Liner Soars Amid Strong Earnings, Durable Booking Demand
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There’s been a lot of chatter recently regarding weakening travel demand.
Heading into the summer months, that’s not necessarily the theme that the bulls would like to hear. Booking Holdings CEO Glenn Fogel even expressed that the travel environment has begun to “normalize” following the post-pandemic boom.
Yet it appears that narrative has been flipped on its head. With the tide smoothing over for cruise liners, is there still time to hop aboard?
Carnival Spikes After Earnings Surprise
Leading cruise and vacation company Carnival (CCL - Free Report) reported impressive second-quarter results this morning, with both the top and bottom lines exceeding estimates. Adjusted earnings of 11 cents per share handily surpassed the median projection of a 1 cent per share loss.
Carnival operates a fleet of more than 90 ships that visit approximately 700 ports. The company provides destination services under recognized brand names such as AIDA, Carnival, Costa, Princess, and Seabourn. Carnival sells its cruises primarily through travel agents, tour operators, vacation planners, and websites.
While revenue growth continued to slow, Carnival stated that sales hit a record in the second quarter. Revenues grew nearly 18% year-over-year and totaled $5.8 billion, edging past the $5.7 billion estimate.
CCL shares soared nearly 8% in early trading to a 5-month high. The stock is currently a Zacks Rank #3 (Hold) and remains down about 3% this year.
Image Source: StockCharts
Analysts noted that demand is trending higher, even surpassing pre-pandemic levels in certain areas. Improved booking trends, bundled package offerings, and increased advertising activities added to the positive sentiment.
Carnival management added to the bullishness, stating that the company is witnessing record volumes for 2025 sailings. The cruise liner boasted that its advanced bookings for fiscal 2025 are already higher than the current year.
For the second time this year, Carnival raised its annual profit forecast. The company now expects adjusted net income of $1.55 billion, marking an increase of $275 million.
The Zacks Rundown
Carnival is part of the Zacks Leisure and Recreation Services industry group, which currently ranks in the top 39% out of more than 250 Zacks Ranked Industries.
Because this group is ranked in the top half of all industries, we expect it to outperform the market over the next 3 to 6 months. Note the favorable characteristics for this group below:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
Rival Royal Caribbean (RCL - Free Report) is also a component of this industry group. RCL stock advanced more than 3% early Tuesday to a new all-time high. The Zacks Rank #1 (Strong Buy) stock has witnessed its share price climb nearly 23% since the start of the year.
Image Source: StockCharts
Royal Caribbean is slated to deliver its own Q2 results in late July. The company boasts an enviable track record of beating earnings estimates, sporting an average 18.3% beat over the last four quarters.
Make sure to keep an eye on these cruise stocks as we dive deeper into the summer months.
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Top Cruise Liner Soars Amid Strong Earnings, Durable Booking Demand
There’s been a lot of chatter recently regarding weakening travel demand.
Heading into the summer months, that’s not necessarily the theme that the bulls would like to hear. Booking Holdings CEO Glenn Fogel even expressed that the travel environment has begun to “normalize” following the post-pandemic boom.
Yet it appears that narrative has been flipped on its head. With the tide smoothing over for cruise liners, is there still time to hop aboard?
Carnival Spikes After Earnings Surprise
Leading cruise and vacation company Carnival (CCL - Free Report) reported impressive second-quarter results this morning, with both the top and bottom lines exceeding estimates. Adjusted earnings of 11 cents per share handily surpassed the median projection of a 1 cent per share loss.
Carnival operates a fleet of more than 90 ships that visit approximately 700 ports. The company provides destination services under recognized brand names such as AIDA, Carnival, Costa, Princess, and Seabourn. Carnival sells its cruises primarily through travel agents, tour operators, vacation planners, and websites.
While revenue growth continued to slow, Carnival stated that sales hit a record in the second quarter. Revenues grew nearly 18% year-over-year and totaled $5.8 billion, edging past the $5.7 billion estimate.
CCL shares soared nearly 8% in early trading to a 5-month high. The stock is currently a Zacks Rank #3 (Hold) and remains down about 3% this year.
Image Source: StockCharts
Analysts noted that demand is trending higher, even surpassing pre-pandemic levels in certain areas. Improved booking trends, bundled package offerings, and increased advertising activities added to the positive sentiment.
Carnival management added to the bullishness, stating that the company is witnessing record volumes for 2025 sailings. The cruise liner boasted that its advanced bookings for fiscal 2025 are already higher than the current year.
For the second time this year, Carnival raised its annual profit forecast. The company now expects adjusted net income of $1.55 billion, marking an increase of $275 million.
The Zacks Rundown
Carnival is part of the Zacks Leisure and Recreation Services industry group, which currently ranks in the top 39% out of more than 250 Zacks Ranked Industries.
Because this group is ranked in the top half of all industries, we expect it to outperform the market over the next 3 to 6 months. Note the favorable characteristics for this group below:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
Rival Royal Caribbean (RCL - Free Report) is also a component of this industry group. RCL stock advanced more than 3% early Tuesday to a new all-time high. The Zacks Rank #1 (Strong Buy) stock has witnessed its share price climb nearly 23% since the start of the year.
Image Source: StockCharts
Royal Caribbean is slated to deliver its own Q2 results in late July. The company boasts an enviable track record of beating earnings estimates, sporting an average 18.3% beat over the last four quarters.
Make sure to keep an eye on these cruise stocks as we dive deeper into the summer months.