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Carnival Corporation & plc (CCL - Free Report) is scheduled to report its second-quarter fiscal 2024 results on Jun 25, 2024, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 22.2%.

How are Estimates Placed?

The Zacks Consensus Estimate for fiscal second-quarter bottom line is pegged at a loss of a cent. In the prior-year quarter, CCL reported a loss of 31 cents.

For revenues, the consensus mark is pegged at approximately $5.7 billion. The metric suggests an increase of 15.1% from the year-ago quarter’s figure.

Carnival Corporation Price and EPS Surprise

Carnival Corporation price-eps-surprise | Carnival Corporation Quote

Let's look at how things have shaped up in the quarter.

Factors to Note

Carnival’s fiscal second-quarter top line is expected to have increased year over year on the back of improvements in booking activities, a strong pricing environment, and increased advertising activities.

Carnival's initiatives to boost brand visibility and generate widespread demand for cruise travel bode well. By focusing on diverse source markets, the company is attracting a significant number of new guests and expanding its base of repeat customers. The comprehensive strategy is likely to have driven overall demand and promoted sustainable revenue growth in the to-be-reported quarter.

Significant investments in capacity creation and expanded offerings are likely to have aided the company’s performance in the to-be-reported quarter. New ships such as Carnival Jubilee, Sun Princess and Queen Anne are expected to drive increased demand. AIDA’s modernization program is likely to have enhanced guest experiences and environmental sustainability. At the same time, the exclusive destination Celebration Key is anticipated to boost ticket revenues and reduce costs, supporting CCL’s growth strategy in the fiscal second quarter.

Increased revenues from its onboard and passenger tickets are likely to have driven the fiscal second-quarter top line. Our model projects fiscal second-quarter passenger ticket revenues to rise 16% year over year to $3.64 billion. We expect onboard and other revenues to increase 11.8% year over year to $1.97 billion.

Strength in core deployments across the Caribbean, Alaska and Europe, along with optimized yield on limited remaining inventory and progress in the commercial space, are likely to have driven EBITDA and margin enhancements in the to-be-reported quarter. For second-quarter fiscal 2024, the company expects adjusted EBITDA to be approximately $1.05 billion.

However, high costs are likely to have hurt the company’s bottom line. For second-quarter fiscal 2024, CCL expects adjusted cruise costs, excluding fuel per ALBD (in constant currency), to increase approximately 3% year over year. The upside includes an unfavorable impact of 1.3 percentage points attributed to lower ALBDs resulting from the Red Sea rerouting, as certain ships repositioned without guests.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Carnival this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Carnival has an Earnings ESP of +70.37%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #3.

Our take

Given the information provided, investors might find it advantageous to contemplate acquiring CCL shares before the unveiling of its second-quarter results. Encouraging signals, such as anticipated rise in booking activities, strength in core deployments and modernization programs, hint at the potential for favorable earnings outcomes.

Regarding valuation, CCL’s shares present an appealing opportunity. With a forward 12-month price-to-earnings ratio of 12.93X, below the Zacks Leisure and Recreation Services industry average of 16.71X, the stock offers compelling value for investors aiming for exposure to the leisure industry.

These positive indicators suggest that the company's growth trajectory remains promising, presenting an opportune moment for investors to consider investing in the stock ahead of second-quarter fiscal 2024 results.

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