Cruise line Carnival Corp. (CCL, Financial) reported its earnings for the third quarter before the opening bell on Sept. 26.
The Miami-based company posted adjusted earnings per share of $2.29, beating expectations of $2.20. Quarterly revenue of $5.52 billion beat estimates of $5.39 billion and increased from $5.1 billion in the prior-year quarter.
Following the announcement, shares rose more than 3% in morning trading.
The trend in the company’s revenue growth over the past decade is illustrated in the graph below.
Carnival said changes in fuel prices and currency exchange rates lowered EPS by 3 cents. In addition, $392 million in noncash impairment charges for ships, trademarks and goodwill were driven by the realignment of the company’s Australia business.
Regardless, President and CEO Arnold Donald said the company had another great quarter of strong operational improvement.
“Our ongoing efforts to create demand well in excess of measured supply growth helped to drive 5% higher cruise ticket pricing,” Donald said. “We have many innovative efforts to accelerate demand in 2018 and beyond, including our recently announced digital streaming channel, OceanView, and our mobile gaming portfolio, PlayOcean, both launching this week."
In regard to the impact of the hurricanes that swept through the Gulf of Mexico and the Caribbean in August and September and the recent earthquakes in Mexico, Donald said several of the company’s ports are temporarily closed.
“Fortunately, our owned destinations including Amber Cove, Dominican Republic; Cozumel, Mexico; Mahogany Bay, Honduras; Half Moon Cay and Princess Cays, Bahamas, as well as more than 40 other ports, plus all those in Mexico, are fully operational and welcoming guests," he said.
Donald added the temporary port closures and voyage disruptions associated with the storms are expected to reduce fourth-quarter earnings by 10 cents to 12 cents per share.
Despite this setback, however, Donald mentioned the company’s record results and strong booking trends should offset this earnings impact. As a result, Carnival revised its outlook for the year higher.
For the fourth quarter, Carnival expects adjusted EPS between 44 cents to 50 cents, down from 67 cents in the comparable quarter of 2016.
For the year, adjusted EPS is forecasted to be in the range of $3.64 to $3.70, raising the lower end of the previous guidance from $3.60. Full-year net revenue yields in constant currency are projected to increase 4% from the prior year, up slightly from the previous guidance of 3.5%.
Among the 14 gurus invested in Carnival, PRIMECAP Management (Trades, Portfolio) has the largest holding with 2.97% of outstanding shares. Ken Fisher (Trades, Portfolio) established a position in the second quarter, while Louis Moore Bacon (Trades, Portfolio) and Caxton Associates (Trades, Portfolio) added to their positions.
Disclosure: I do not own any stocks mentioned.
