Carnival Hurting From Weak Earnings Guidance

Data from the past 13 weeks suggest that fleetwide booking volumes for the next three quarters were running well ahead of last year, at slightly lower prices due to transactional currency impacts. Currently, cumulative advance bookings for the next three quarters are well ahead of the prior year, at slightly lower prices again due to transactional currency impacts.

As a result, the company gave guidance for fiscal 2015 as EPS in the range of $2.35 to $2.50, compared to the consensus estimate $2.50. Carnival also expects revenue to increase 3% to 4% on a constant currency basis, and there is a consensus estimate of $15.65 billion in revenue.

For the fiscal third quarter, Carnival expects to have $1.56 to $1.60 in EPS and for net revenue to increase 3% to 4%. The consensus estimates are $1.70 in EPS on $4.80 billion in revenue.

Earlier in June, Carnival finalized a contract with Meyer Werft shipyard to build four next-generation ships. These ships will feature the largest guest capacity in the world, as well as being the first cruise ships to be powered at sea by liquefied natural gas.

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Arnold Donald, president and CEO of Carnival, commented on earnings:

We more than doubled our second quarter earnings versus the comparable period a year ago and significantly exceeded our quarterly earnings guidance. Our initiatives to create demand and leverage our scale benefited both cruise ticket prices and onboard revenues contributing to 5% revenue yield improvement (constant currency) this quarter. While all of our North American brands enjoyed strong revenue yield improvement, our Carnival Cruise Line brand performed particularly well again this quarter. We thank our teams around the globe for their consistent delivery of exceptional guest experiences as well as our travel agent partners for their strong support, both of which are critical to our success.

At the end of the quarter, Carnival had cash and cash equivalents of $298 million, compared to the end of fiscal 2014 when it had $331 million.

Shares of Carnival were down about 1% at $49.39 Tuesday morning. The stock has a consensus analyst price target of $52.35 and a 52-week trading range of $33.11 to $50.65.