Carnival Reports First Quarterly Profit in Years Along With Upbeat Forecast: So Why is the Stock Falling?

Shares of Carnival Corp. (CCL) are down more than 5% in Friday morning’s trading session after the cruise line reported its first quarterly profit since before the pandemic. 

The company’s revenue of $6.85 billion represented not just a 59% growth, but also a new all-time high. The previous high was $6.53 billion in 2019. Analysts were looking for $6.7 billion for the quarter.

Carnival also turned things around from a profit standpoint. This time last year the company reported a loss of 58 cents per share. But, adjusted earnings of 86 cents per share beat the analyst consensus of 76 cents per share.

It was a record-breaking quarter in many aspects as the company also exceeded its previous all-time high for total bookings by 28% – reporting $6.3 billion compared to $4.9 billion in 2019. Occupancy rates also soared to 109% up from a measly 84.2% this time last year. 

It’s expected that this will continue into 2024 as CEO Josh Weinstein attributed the success to strong demand for travel. North American, Australian, and European segments all thrived – and the company is booked out further into the upcoming year than ever before.

Looking ahead in the shorter term, the company remains optimistic about finishing out the remainder of 2023 on a high note. The forecast for the full year included EBITDA of $4.1 billion to $4.2 billion. 

Carnival is just the latest cruise line to report record highs after competitor Royal Caribbean Group hit a three-year high earlier this summer. Norwegian Cruise Line posted its first positive earnings since before the pandemic as well – signaling that the cruise line industry has wind in its sails once again.

And yet, CCL is down more than 5% in today’s trading session and 23% in the past three months. This may be attributed to analyst skepticism surrounding fuel prices weighing the cruise lines down. 

But, we’ve taken a look at the stock through the VectorVest stock analyzer to help you tune out the noise and figure out your next move with CCL. We found three things you need to see…

Despite Excellent Upside Potential and Fair Safety, CCL Has Poor Timing

VectorVest helps you simplify your trading strategy through a proprietary stock rating system. It empowers you to win more trades with less work as you’re given all the insights you need to make calculated, emotionless decisions in 3 ratings: relative value (RV), relative safety (RS), and relative timing (RT).

Each rating sits on its own scale of 0.00-2.00 with 1.00 being the average. But based on the overall VST rating for a given stock, you’re also given a clear buy, sell, or hold recommendation. Here’s what you need to know about CCL:

• Excellent Upside Potential: The RV rating compares a stock’s long-term price appreciation potential to AAA corporate bond rates and risk. This offers far superior insights than a simple comparison of price to value alone. Right now, the RV rating of 1.43 is excellent for CCL.
• Fair Safety: The RS rating is an indicator of risk that comes from a deep analysis of a company’s financial consistency & predictability, debt-to-equity ratio, and business longevity. The RS rating of 0.95 is deemed fair for CCL despite being slightly below the average.
• Poor Timing: The biggest issue for CCL right now is the strong, negative price trend that’s persisted for months on end. The stock has a poor RT rating of 0.56 to reflect its performance. This is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.

The overall VST rating of 1.00 is right at the average - so where does that leave investors or prospective traders? Should you buy or sell this stock, or hold off on doing anything for the time being?

A clear answer is just a click away through a free stock analysis at VectorVest. Get the inside scoop and make your next move with complete confidence and clarity!

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VectorVest advocates buying safe, undervalued stocks, rising in price. Shares of CCL fell more than 5% in Friday’s trading session despite delivering record-shattering earnings and maintaining an upbeat forecast for the future. The stock has excellent upside potential and fair safety, but poor timing holding it back.

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