Why Carnival Earnings Are a Huge Win

Carnival Corp. (NYSE: CCL) reported fiscal second-quarter financial results before the markets opened on Tuesday. The company said that it had $0.49 in earnings per share (EPS) on $3.7 billion in revenue. There were consensus estimates from Thomson Reuters that called for $0.39 in EPS on $3.68 billion in revenue. The same period from last year had $0.25 in EPS on $3.59 billion in revenue.

During this quarter, Carnival became the first cruise company to begin operating voyages from the U.S. to Cuba in more than four decades through its Fathom brand.

One of the key metrics that the company noted was that at this time, cumulative advance bookings for the remainder of the year were well ahead of the prior year at slightly higher prices. Since March, bookings for the remainder of the year are at higher prices with volumes running lower than last year because there is less inventory remaining for sale than at this time in 2015.

In terms of outlook for the fiscal third-quarter, the company expects net revenue yields to be up 2% to 3% and for EPS to be in the range of $1.83 to $1.87. There are consensus estimates calling for $5.08 billion in revenue and $1.98 in EPS for the coming quarter.

Arnold Donald, President and CEO of Carnival, commented:

Our strong second quarter demonstrates continued momentum as we again achieved a near doubling of adjusted earnings per share.  Our ongoing effort to drive demand for our brands in excess of our measured capacity growth has led to increased revenues and helped maintain the mid-point of our full year earnings guidance despite the recent currency movements and rises in fuel prices that combined represent a negative $0.17 per share.

On the books, cash and cash equivalents totaled $519 million at the end of the quarter, versus $1.40 billion at the end of the previous fiscal year.

Shares of Carnival closed Monday down 4.4% at $43.64, with a consensus analyst price target of $60.06 and a 52-week trading range of $40.52 to $55.77. Following the release of the earnings report the stock was up 4% at $45.44 early on Tuesday.