Carnival Corporation (NYSE:CCL) could report fourth quarter and full year financial results between December 17 and 20, based on previous Q4 announcements. Although the company’s investor’s relation page makes no mention of pending events, we’d expect management to release time and date details early next week.
Wall Street anticipates that the resorts company breakeven for the quarter. iStock expects CCL to hit Wall Street’s consensus number. The iEstimate is $0.00; although, there may be downside to our estimate.
Carnival Corporation is a cruise company. The Company operates in two segments: North America and Europe, Australia & Asia (EAA). Its North America segment cruise brands include Carnival Cruise Lines, Holland America Line, Princess Cruises (Princess) and Seabourn. Its EAA segment cruise brands include AIDA Cruises (AIDA), Costa Cruises (Costa), Cunard, Ibero Cruises (Ibero), P&O Cruises (Australia) and P&O Cruises (United Kingdom).
Despite public relation nightmares for the industry over the past few years, CCL has topped Wall Street’s expectations 11 of the last 16 quarters, missed twice with the remaining quarterly checkups meeting the street’s mark.
Although Carnival cruised past (couldn’t help ourselves) the consensus estimate five of the last six announcements, the stock sank (there we go again) in the three days surrounding five of the last six. On average, the handful of red responses lost -5.64% with a range of -3.10% to -12.50% during earnings time. The lone happy reaction in the last six saw the stock climb a measly 2.5%. That’s an ugly mix.
December EPS-drive price sensitivity has been mixed. In the last four years, CCL returned -3.9%, 0.4%, 8.8%, and -4.0% in the three-days surrounding the Q4 profit report. Meanwhile, EPS fell short twice while bypassing and meeting the mark once for each.
Now, we move onto why there could be some downside to Carnival’s earnings-per-share. According to Travelmarketreport.com, “growth of online bookings on cruise websites has slowed.” As a result, the industry has to repair strained relationship with human travel agents to drive sales.
PCW analyst Maggie Rauch says, “Since traffic is down, there’s the desire to extract maximum value from each customer.”
One the eve of the announcement, research firm, Stifel reduced their outlook for the quarter and says, the company’s formal FY14 guidance could miss expectations by a small amount,” but Stifel says to expect better things later in 2014.
Travelmarketreport.com agrees, “[Cruise] Revenues will increase at a faster rate in the next two years, with 3% growth in 2014 and 6% in 2015, to top $16 billion.”
However, CCL and shareholders will have to deal with next week’s report first. If Q3’s financial statements hold over into this quarter, then total costs could continue to outpace revenue growth, which is disadvantageous for margins.
Overall: The iEstimate and industry news suggest Carnival Corporation’s (NYSE:CCL) EPS could fall short of Wall Street’s breakeven consensus. If Stifel is correct about guidance, then CCL’s price is likely to sink, again