Shares of Carnival Corporation (CCL) hit a 52-week high of $45.52 in the trading session on Dec 23 based on the company’s impressive fourth-quarter 2014 results on Dec 19. In fact, share price of this cruise company rose 1.1% since then. Further, the company’s strong guidance for fiscal 2015 earnings caught investors’ attention.
It seems Carnival is slowly scripting a turnaround after the Costa disaster hurt bookings. Its several brand-building efforts and other marketing promotions are reaping benefits. Carnival recently partnered Dr. Seuss Enterprises to provide a variety of exciting and immersive dining and entertainment experiences on its fleet of 24 "Fun Ships” as part of its brand-building efforts.
These initiatives have yielded results as total revenue rose 1.6% year over year to $3.72 billion, backed by higher cruise sales and onboard spending.
Also, cumulative advance bookings for the first three quarters of 2015 are ahead of the prior year, at slightly higher prices. Since September, booking volumes for the first three quarters of 2015 are running ahead of last year's levels. These advance booking trends reflect that the company’s brand building efforts have borne fruit.
Also, Carnival’s adjusted earnings of 27 cents per share surpassed the Zacks Consensus Estimate of 19 cents as well as management’s guidance range of 15–19 cents. Further, quarterly earnings were significantly higher than the year-ago quarter figure of 4 cents.
Net revenue yields (in constant currency) increased 2.8% year over year, better than the company's guidance of net revenue yield (in constant dollar) to be up in the range of 1.5% to 2.5%. Gross revenue yields (in current dollars), however, decreased 0.2%.
Such significant yields resulted in the company’s strong guidance both for the first quarter of 2015 and full-year 2015. First-quarter net revenue yields in constant dollar are expected to be flat to up 1% compared with the prior year. Based on current booking trends, the company expects net revenue yields for 2015, on a constant dollar basis, to be up approximately 2% from the prior year. Further, revenue yields are expected to be better in the second half of 2015.
Carnival also guided for strong earnings growth with adjusted earnings projected in the range of 7 to 11 cents, in the fiscal first quarter of 2015. Also, the company expects adjusted earnings for 2015 in the range of $2.30 to $2.60 per share in 2015.
A gradually improving U.S. economy and an improved macroeconomic environment in Europe led to most analysts revising their earnings estimates higher for the current quarter over the last 7 days.
Carnival currently carries a Zacks Rank #2 (Buy). Some other stocks in the leisure and recreational industry that can be considered include Vail Resorts Inc. (MTN), Speedway Motorsports Inc. (TRK) and Diamond Resorts International, Inc. (DRII). All these stocks sport a Zacks Rank #1 (Strong Buy).
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