Post Earnings Coverage as Carnival Earnings Surge 17 Percent

LONDON, UK / ACCESSWIRE / September 28, 2016 / Active Wall St. announces its post-earnings coverage on Carnival Corp. & PLC (NYSE: CCL) (NYSE: CUK). The companies posted announced its third quarter fiscal 2016 results on September 26, 2016. The cruise-line operator reported the strongest quarterly earnings in its history, wherein both earnings and revenues beat market estimates and boosted its earnings forecast for the current year. Carnival Corp. and Carnival PLC operate as dual listed company, whereby the businesses of Carnival Corp. and Carnival PLC are combined and they function as a single economic entity through contractual agreements between separate legal entities. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

For the three months ended August 31st, 2016, Carnival reported net income of $1.42 billion, or $1.93 per share, up from $1.22 billion, or $1.56 a share, a year earlier. Excluding fuel-hedging effects and other items, earnings rose to record $1.92 per share compared to $1.75 per share reported in Q3 2015, thus outpacing analysts’ estimate of $1.89 per share and coming in above the company’s guidance range of $1.83 per share to $1.87 per share. The increase in adjusted earnings was driven by share buyback accretion which resulted in a $0.10 per share gain, operational improvements which resulted in a gain of $0.05 per share, and favourable net impact of fuel prices in currency were $0.02 per share. Revenue for Q3 2016 was $5.10 billion, up 4.4% from $4.90 billion in Q3 2015, ahead of the $5.06 billion projected by analysts.

Operating Metrics

During Q3 2016 Carnival’s capacity increased almost 4%. The North American brands were up over 2%, while its European, Australia, and Asian brands, also known as the EAA brands, were up over 6%.

Net revenue yields, which take into account spending per available berth, rose 2.7% which is near the higher end of growth expectation of 2% to 3%. This was the slowest growth since the first quarter of 2015. Net ticket yields were up 3.1%. This increase was attributed to North American brands deployment in the Caribbean, Alaska, and Europe, as well as its EAA brands deployment in Europe, partially offset by yield reductions in Australia and Asia.

After eight consecutive quarters of mid to high single-digit yield increases, Carnival’s net on-board and other yields only grew 1.3% over much tougher comparable from Q3 2015. Net cruise cost per Available Lower Berth Day (ALBD), excluding fuel, was up over 5% driven by the timing of advertising expenses and the premastering of Queen Mary 2 in dry dock.

Segment Revenues

During Q3 2016, Carnival’ Passenger Tickets revenue rose 4.7% on y-o-y basis to $3.80 billion from $3.63 billion in the year earlier quarter. The company’s Onboard and Other revenues grew 4% to $1.15 billion in the reported quarter. However, revenue from its Tour and Other segment were down 1.3% on y-o-y basis to $148 million.

Outlook

Carnival increased its FY16 adjusted earnings range to $3.33 per share to $3.37 per share from the prior range of $3.25 per share to $3.35 per share. Based on current booking trends, the company continues to expect FY16 net revenue yields in constant currency to be up approximately 3.5%. Also, the company expects net cruise costs, excluding fuel per ALBD, on a constant currency basis, for FY16 to be up nearly 1.5%.

The company is forecasting earnings in the range of $0.55 per share to $0.59 per share for Q4 2016. Analysts expect earnings of $0.58 per share. Q4 2016 net revenue yields in constant dollars are expected to increase roughly 3% on y-o-y basis Net cruise costs, excluding fuel per ALBD, are expected to grow 1% year over year on a constant dollar basis.

Share Repurchase

Since the beginning of Q3 2016, Carnival has repurchased over $700 million of its shares, bringing the cumulative total since late last year to over 50 million shares and nearly $2.5 billion of buybacks. The company has approximately $500 million remaining on the third $1 billion stock buyback authorization.

Stock Performance

Carnival Corp.’s stock jumped 4.05%, closing Tuesday’s session at $48.35 on volume of 7.84 million shares, which was higher than the three months average volume of 5.07 million shares. Additionally, the stock has advanced 2.65% and 11.38% in the last one month and past three months, respectively. The company’s shares are trading a PE ratio of 16.71 and have a dividend yield of 2.90%.

Carnival PLC’s ADS shares advanced 4.58%, closing the trading session at $48.83. The company’s shares have gained 1.60% in the last one month and 11.20% in the three months. The stock is trading a PE ratio of 16.87 and has a dividend yield of 2.87%.

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