Carnival (CCL) Q3 Earnings & Revenues Lag Estimates, Rise Y/Y

Carnival Corporation & plc CCL reported third-quarter fiscal 2022 (ended Aug 31, 2022) results, with earnings and revenues missing the Zacks Consensus Estimate. Both the metrics lagged the consensus mark for the eighth straight quarter. Nevertheless, the top and the bottom line improved on a year-over-year basis.

Carnival Corporation's chief executive officer Josh Weinstein, stated, "During our third quarter our business continued its positive trajectory, achieving over $300 million of adjusted EBITDA and reaching nearly 90% occupancy on our August sailings. We are continuing to close the gap to 2019 as we progress through the year, building occupancy on higher capacity and lower unit costs."

Earnings & Revenues

In the quarter under review, the company reported a loss per share of 58 cents, wider than the Zacks Consensus Estimate of a loss of 12 cents. In the year-ago quarter, the company had reported a loss per share of $1.75.

Carnival Corporation Price, Consensus and EPS Surprise

 

Carnival Corporation Price, Consensus and EPS Surprise

Carnival Corporation price-consensus-eps-surprise-chart | Carnival Corporation Quote

 

Revenues in the quarter totaled $4,305 million, which fell short of the consensus mark of $4,951 million. The top line improved sharply from the prior-year quarter’s figure of $546 million. Passenger ticket and onboard and other revenues were $2,595 million and $1,711 million, respectively.

Q3 Financials

During the fiscal third quarter, the company reported an adjusted net loss of $688 million. GAAP net loss for the quarter amounted to $770 million.

In third-quarter fiscal 2022, occupancy came in at 84% compared with 69% reported in the prior quarter. Available lower berth days (“ALBD”) in the quarter were 21 million, marking 92% of total fleet capacity, up from 74% in second-quarter fiscal 2022.

For cruise segments, revenue per PCD for the third quarter of fiscal 2022 declined from strong 2019 levels.

Balance Sheet

Cash, cash equivalents and short-term investments as of Aug 31, 2022, were $7.1 billion compared with $7.2 billion in the prior quarter. Carnival ended the quarter with liquidity of $7.4 billion. Total debt (current and long-term) as of Aug 31, 2022, was $34.1 billion compared with $35.1 billion as of May 31, 2022.

Adjusted EBITDA, as of Aug 31, 2022, came in at $303 against $(928) reported in the previous quarter.

Bookings Update

During the fiscal third quarter, the company reported accelerated booking volumes on account of relaxed protocols and better alignment of land-based vacation alternatives. Cumulative advance bookings for the fourth quarter of fiscal 2022 are below the historical range. The company stated that cumulative advanced bookings for the first half of 2023 are above the historical ranges and at increased prices compared with 2019 levels.

Meanwhile, total customer deposits as of Aug 31 were $4.8 billion compared with $5.1 billion as of May 31, 2022. As of Sep 30, 2022, 95% of the company's capacity had resumed guest cruise operations.

Guidance

The company continues to expect a net loss for the fourth quarter of fiscal 2022. Given the ongoing resumption of guest cruise operations, the company anticipates continued improvement in adjusted EBITDA and occupancy during 2023. It expects eight of its nine brands to have their entire fleet operational by the fourth quarter of fiscal 2022.

Zacks Rank and Stocks to Consider

Currently, Carnival carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Some better-ranked stocks in the Zacks Consumer Discretionary sector include Marriott Vacations Worldwide Corporation VAC, Hyatt Hotels Corporation H and Choice Hotels International, Inc. CHH.

Marriott Vacations sports a Zacks Rank #1. VAC has a trailing four-quarter earnings surprise of 13.9%, on average. The stock has declined 24.9% in the past year.

The Zacks Consensus Estimate for VAC’s current financial year sales and EPS indicates an increase of 19.7% and 131.4%, respectively, from the year-ago period’s reported levels.

Hyatt carries a Zacks Rank #2. H has a trailing four-quarter earnings surprise of 798.8%, on average. The stock has declined 0.6% in the past year.

The Zacks Consensus Estimate for H’s current financial year sales and EPS indicates growth of 89.1% and 113%, respectively, from the year-ago period’s reported levels.

Choice Hotels carries a Zacks Rank #2. CHH has a trailing four-quarter earnings surprise of 11.2%, on average. The stock has declined 17.4% in the past year.

The Zacks Consensus Estimate for CHH’s current financial year sales and EPS indicates growth of 25.3% and 21.7%, respectively, from the year-ago period’s reported levels.

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