What to Expect From Carnival Q1 Earnings

Carnival Corp. (NYSE: CCL) is scheduled to report its fiscal first-quarter financial results before the markets open on Wednesday. The consensus estimates from Thomson Reuters call for $0.32 in earnings per share (EPS) on $3.63 billion in revenue. In the same period of the previous year, the cruise line operator posted EPS of $0.20 and $3.53 billion in revenue.

The entertainment sector, particularly travel and leisure, can be great fun for consumers, but sometimes it can be a hard one for investors to make profits. After all, a theme does not always stay popular. Lots of issues have sunk Carnival shares this year by 10%, ranging from worries about the Zika virus to actual illness of passengers from the norovirus on the Carnival Sunshine. Many on Wall Street, though, believe there is plenty of smooth sailing ahead for the stock.

Credit Suisse recently assumed coverage of many cruise line and theme park owners and operators with Outperform ratings. While the firm technically made no changes to its prior price targets and earnings estimates, there could be big upside if the sector view proves right.

Carnival was started as Outperform at Credit Suisse and given a target price of $60.00. This was versus a $47.96 prior close, implying 25% upside, not including the dividend yield of about 2.5%. Carnival now has a consensus analyst price target of $60.00 as well. Its market cap currently is less than $38 billion.
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As for Carnival’s headwinds, norovirus is awful for those that experience it, but it affects less than 1% of all cruise ship passengers. Carnival is well-versed in handling these outbreaks when they occur. As for Zika, Carnival and other cruise ship operators have waived cancellation fees for worried pregnant women, as well as allowing them to book vacations outside the affected areas. Though this trend may hurt Carnival’s bottom line, its rivals are in the same boat.

And there is good news for Carnival as well. It recently announced the installation of a craft brewery on one of its ships. And a Carnival cruise liner soon will be first U.S. ship to visit Cuba in 50 years.

Shares of Carnival closed trading up fractionally on Monday to $49.02. As mentioned, the consensus analyst price target is $60, and the 52-week trading range is $40.52 to $55.77.