We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Investors Should Retain Carnival (CCL) Stock Now
Read MoreHide Full Article
Carnival Corporation & plc (CCL - Free Report) is well-poised to benefit from the solid booked position for the remainder of the year, with pricing and occupancy significantly higher than the 2023 levels. Also, the focus on marketing campaigns, fleet-optimization efforts alongwith fleet expansion initiatives is encouraging.
Shares of the company have gained 32.7% in the past year, compared with the industry’s increase of 7.9%. However, increased cruise costs and geopolitical uncertainties are concerns. Let’s delve deeper.
Growth Catalysts
Carnival is the largest and, historically, the most profitable cruise operator in the world. The company’s cruise brands are well diversified across geographies, including Asia and Europe, and strategically positioned at various price points within the larger North American cruise market. This enables the company to cater to passengers in various geographic regions as well as within the contemporary, premium and luxury cruise segments.
The company benefited from a solid booking trend. In the fiscal first quarter, the company announced strong bookings for its NAA and Europe segments, with booking levels notably higher compared with the previous year’s levels. Despite limited inventory, booking volumes reached unprecedented levels, courtesy of solid demand for future sailings (beyond 2025). The surge in demand resulted in increased prices and a longer booking window. The company reported a solid booked position for the remainder of the year, with pricing and occupancy significantly higher than the 2023 levels.
Carnival expects 2024 capacity to increase by approximately 4.5% compared with 2023 levels. The enhancement was backed by a rise in the yield of more than one percentage point to about 9.5%, fueled by higher prices (as witnessed in booking trends this year) and the ongoing strong demand. The factors were expected to generate approximately $200 million as revenues.
This Zacks Rank #3 (Hold) company emphasized the exit of 26 less efficient ships from its fleet (since 2019). Although the initiative contracted the capacity growth to 3% (compounded annually from 2019 through 2025), the company remains optimistic about replacement with new ships and capitalization of pent-up demand. CCL anticipates 50% of its capacity to comprise newly delivered, larger and more efficient ships, thereby making way for a return to profitability and improvement in return on invested capital.
Image Source: Zacks Investment Research
Concerns
The company had been witnessing labor challenges in a handful of markets. In the fiscal first quarter, operating costs and expenses increased 12% year over year to $3.7 billion. Several factors drove this uptick, including a 4.2% capacity rise in Available Lower Berth Days (ALBDs), elevated commissions, transportation costs and other expenses linked to higher ticket pricing and increased guest numbers. Additionally, higher onboard revenues led to a $43 million increase in onboard and other costs of sales, while repair and maintenance expenses, including dry-dock costs, rose by $30 million. Furthermore, a net unfavorable foreign currency translational impact and increased port expenses, each contributed $25 million to the overall rise in expenses.
For second-quarter fiscal 2024, it expects adjusted cruise costs excluding fuel per ALBD (in constant currency) to increase approximately 3% year over year. The increase includes an unfavorable impact of 1.3 percentage points attributed to lower ALBDs resulting from the Red Sea rerouting, as certain ships repositioned without guests.
STRA has a trailing four-quarter earnings surprise of 36.2%, on average. The stock has risen 53.6% in the past year. The Zacks Consensus Estimate for STRA’s 2024 sales and earnings per share indicates an increase of 6.4% and 33.3%, respectively, from the year-ago levels.
Netflix, Inc. (NFLX - Free Report) presently sports a Zacks Rank of 1. NFLX has a trailing four-quarter earnings surprise of 9.3%, on average. The stock has risen 57.1% in the past year.
The consensus estimate for NFLX’s 2024 sales and EPS implies a rise of 14.8% and 52.2%, respectively, from the year-ago levels.
AMC Entertainment Holdings, Inc. (AMC - Free Report) currently sports a Zacks Rank of 1. AMC has a trailing four-quarter earnings surprise of 38%, on average. The stock has increased 46.2% in the past month.
The Zacks Consensus Estimate for AMC’s 2024 EPS implies growth of 70.5% from the year-ago level.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Here's Why Investors Should Retain Carnival (CCL) Stock Now
Carnival Corporation & plc (CCL - Free Report) is well-poised to benefit from the solid booked position for the remainder of the year, with pricing and occupancy significantly higher than the 2023 levels. Also, the focus on marketing campaigns, fleet-optimization efforts alongwith fleet expansion initiatives is encouraging.
Shares of the company have gained 32.7% in the past year, compared with the industry’s increase of 7.9%. However, increased cruise costs and geopolitical uncertainties are concerns. Let’s delve deeper.
Growth Catalysts
Carnival is the largest and, historically, the most profitable cruise operator in the world. The company’s cruise brands are well diversified across geographies, including Asia and Europe, and strategically positioned at various price points within the larger North American cruise market. This enables the company to cater to passengers in various geographic regions as well as within the contemporary, premium and luxury cruise segments.
The company benefited from a solid booking trend. In the fiscal first quarter, the company announced strong bookings for its NAA and Europe segments, with booking levels notably higher compared with the previous year’s levels. Despite limited inventory, booking volumes reached unprecedented levels, courtesy of solid demand for future sailings (beyond 2025). The surge in demand resulted in increased prices and a longer booking window. The company reported a solid booked position for the remainder of the year, with pricing and occupancy significantly higher than the 2023 levels.
Carnival expects 2024 capacity to increase by approximately 4.5% compared with 2023 levels. The enhancement was backed by a rise in the yield of more than one percentage point to about 9.5%, fueled by higher prices (as witnessed in booking trends this year) and the ongoing strong demand. The factors were expected to generate approximately $200 million as revenues.
This Zacks Rank #3 (Hold) company emphasized the exit of 26 less efficient ships from its fleet (since 2019). Although the initiative contracted the capacity growth to 3% (compounded annually from 2019 through 2025), the company remains optimistic about replacement with new ships and capitalization of pent-up demand. CCL anticipates 50% of its capacity to comprise newly delivered, larger and more efficient ships, thereby making way for a return to profitability and improvement in return on invested capital.
Image Source: Zacks Investment Research
Concerns
The company had been witnessing labor challenges in a handful of markets. In the fiscal first quarter, operating costs and expenses increased 12% year over year to $3.7 billion. Several factors drove this uptick, including a 4.2% capacity rise in Available Lower Berth Days (ALBDs), elevated commissions, transportation costs and other expenses linked to higher ticket pricing and increased guest numbers. Additionally, higher onboard revenues led to a $43 million increase in onboard and other costs of sales, while repair and maintenance expenses, including dry-dock costs, rose by $30 million. Furthermore, a net unfavorable foreign currency translational impact and increased port expenses, each contributed $25 million to the overall rise in expenses.
For second-quarter fiscal 2024, it expects adjusted cruise costs excluding fuel per ALBD (in constant currency) to increase approximately 3% year over year. The increase includes an unfavorable impact of 1.3 percentage points attributed to lower ALBDs resulting from the Red Sea rerouting, as certain ships repositioned without guests.
Key Picks
Here are some top-ranked stocks from the Consumer Discretionary sector.
Strategic Education, Inc. (STRA - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
STRA has a trailing four-quarter earnings surprise of 36.2%, on average. The stock has risen 53.6% in the past year. The Zacks Consensus Estimate for STRA’s 2024 sales and earnings per share indicates an increase of 6.4% and 33.3%, respectively, from the year-ago levels.
Netflix, Inc. (NFLX - Free Report) presently sports a Zacks Rank of 1. NFLX has a trailing four-quarter earnings surprise of 9.3%, on average. The stock has risen 57.1% in the past year.
The consensus estimate for NFLX’s 2024 sales and EPS implies a rise of 14.8% and 52.2%, respectively, from the year-ago levels.
AMC Entertainment Holdings, Inc. (AMC - Free Report) currently sports a Zacks Rank of 1. AMC has a trailing four-quarter earnings surprise of 38%, on average. The stock has increased 46.2% in the past month.
The Zacks Consensus Estimate for AMC’s 2024 EPS implies growth of 70.5% from the year-ago level.