Shares of Carnival Corporation CCL hit a new 52-week high of $51.00 during the trading session on Jun 25, on the back of impressive second-quarter 2015 results reported on Jun 23. Further, the company’s strong guidance for fiscal 2015 earnings caught investors’ attention.
Carnival’s adjusted earnings of 25 cents per share comfortably surpassed the Zacks Consensus Estimate of 16 cents as well as management’s guidance range of 11–15 cents. Further, quarterly earnings were significantly higher than the prior-year figures. Better-than-expected revenues as well as higher-than-expected revenue yields drove the substantial rise in earnings.
Net revenue yields (in constant currency) increased 4.1% year over year, better than the guidance range of 2–3%. Though revenue declined 1.2% year over year to $3.59 billion, mainly due to foreign exchange headwinds, it beat the Zacks Consensus Estimate by 1.4%.
Further, cumulative advance bookings for the next three quarters are well ahead of last year, even if at a slightly lower prices. Based on the strong booking trends, the company increased the lower end of the adjusted earnings guidance for 2015 to a range of $2.35–$2.50 from $2.30–$2.50.
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 the 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 next three quarters of 2015 are much better than the comparable period last year, at slightly lower prices. A gradually improving U.S. economy and a somewhat better macroeconomic environment in Europe, also led to the positivity surrounding the stock.
Carnival currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the leisure and recreational industry are Diamond Resorts International, Inc. DRII, The Madison Square Garden Company MSG and Speedway Motorsports Inc. TRK. All these stocks carry a Zacks Rank #2 (Buy).
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