Carnival Corp. Set to Break Two Significant Streaks With Upcoming Fiscal Third-Quarter Results

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Monday, September 25, 2023 - Carnival (NYSE:CCL) Corp., the largest cruise line operator globally, is set to announce its fiscal third-quarter results this Friday, anticipated to mark the end of two significant trends for the company.

For 14 quarters in a row, dating back to the last quarter of fiscal 2019, Carnival reported losses due to the severe impact of COVID-19 on the cruise industry and international travel restrictions that limited access to global ports. This led to a substantial revenue drop, resulting in a loss of $9.5 billion in fiscal 2021, slightly less than the $10.2 billion loss from the previous year.

To stay solvent during this period, Carnival, along with smaller competitors Royal Caribbean (NYSE:RCL) and Norwegian Cruise Line (NYSE:NCLH), issued new stock at low prices during their operational downtime, leading to a significant increase in share count. They also heavily relied on financing, which resulted in Carnival's debt tripling and Royal Caribbean's and Norwegian Cruise Line's debt roughly doubling.

However, these companies are now witnessing a return to profitability. Royal Caribbean and Norwegian Cruise Line posted profits for their second quarter ending in June. Though Carnival reported a net loss for its fiscal second quarter ending in May, all 13 major analysts providing earnings estimates predict that the company will report positive net income this Friday. Predictions range from a per-share profit of $0.70 to $0.84, with a consensus average of $0.75.

Another trend expected to end with this week's report is Carnival's eight-quarter streak of more than doubling its year-over-year growth. Analysts predict a sharp deceleration in growth, with a 37% increase to reach $6.7 billion for the quarter ending last month.

This deceleration is not seen as a concern by industry experts. After the cruise industry was halted in spring 2020, year-over-year comparisons were favorable heading into the second half of fiscal 2021. Now, as Carnival and its peers are back in operation, Carnival is forecasted to achieve record revenue by the end of fiscal 2023.

Furthermore, Carnival's future bookings reached a record high in the previous quarter, with customer deposits for these sailings totaling $7.2 billion, $1.2 billion more than its previous record for a quarter's end. While some travel sectors experienced sluggishness this summer, cruise lines have been late entrants to the rebound travel market. The company's guidance on Friday will determine its stock direction, but the fiscal third quarter should demonstrate a solid performance, marking an end to two long streaks at Carnival.

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