Carnival shares ticked up Wednesday on Q1 results after an early retreat, amid a strong start to the 2024 travel season for cruise lines. Meanwhile, rival Royal Caribbean is trading in a buy zone at record highs.
Carnival Cruise reported a loss of 17 cents per share, improved from a loss of 55 cents per share the year prior. Revenue increased 22% to a Q1 record of $5.4 billion, but slowed for the seventh consecutive quarter.
For the first quarter, FactSet analysts expected Carnival to report a loss of 18 cents per share on $5.42 billion in revenue.
Carnival noted "an early start to a robust wave season" and saw record booking volumes for all future sailings, which exceeded company expectations. The company achieved higher prices than last year on its first-quarter booking volumes and entered 2024 with less inventory remaining for sale.
Carnival said its booked position for the rest of the year "continues to be the best on record," with pricing and occupancy "considerably higher than 2023."
The cruise operator's 2024 outlook was in-line with forecasts. The company guided a Q2 loss of 3 cents per share, compared to a loss of 31 cents the year prior. Carnival sees full-year earnings of 98 cents per share.
FactSet analysts predict a Q2 loss of 3 cents per share on nearly 16% revenue growth to $5.69 billion. Wall Street estimates full-year earnings of 98 cents per share on 12.3% revenue growth to $24.66 billion.
Travel Wave
Cruise lines are riding a wave of bookings to kick off 2024.
Royal Caribbean in late February hiked its 2024 earnings guidance, citing stronger-than-expected vacation demand. The cruise line now expects full-year earnings per share of $9.90-$10.10, up 40 cents from its Feb. 1 target of a record $9.50-$9.70. About 15 cents of that increase reflects an improved revenue outlook in the first quarter. The company attributed the demand increase to its "WAVE season," which offers extra deals from January through March.
Elsewhere, Carnival at the end of January announced it is almost sold out for the first half of the year after seeing record booking volumes since November.
However, the company expects to take a 7-8 cent per share hit to its adjusted 2024 earnings due to rerouting around the Red Sea conflict. Carnival expects most of the profit impact to occur in Q2 and said it has not seen any effects to its booking trends. The cruise line giant reported better-than-expected Q4 earnings and revenue in late December.
Susquehanna on Monday lowered its price target on CCL stock to 22 from 23, noting it expects first-quarter earnings to reflect rerouting and itinerary impacts. Still, the firm believes the strength of Carnival's 2024 wave season should drive unit revenues to outperform. Susquehanna maintained a positive rating on the shares.
Mizuho initiated Carnival on Tuesday with a 21 price target.
Fleet Expansion
Carnival on Tuesday announced it reached an agreement with Meyer Werft shipyard for a fifth excel-class ship for the Carnival Cruise Line with delivery set for 2028. The new, 180,000-ton ship will run on liquefied natural gas and designed to carry over 6,400 guests and 1,800 crew.
The announcement comes after Carnival in mid-February said it ordered its fourth excel-class ship for its namesake line, which will join the fleet in the spring of 2027. Tuesday's announcement marks Carnival's 11th excel-class ship across four of its brands.
"This measured capacity growth strategy will result in our adding one to two ships per year beginning in 2027, and we will be identifying additional fleet plans over the coming months for our cruise lines to meet capacity demand and improve execution," CEO Josh Weinstein said in the release.
Carnival Stock
CCL stock reversed up 0.9% Wednesday after retreating 2.7% in early trade. Shares dipped 0.5% Tuesday ahead of results.
Carnival stock is consolidating with a 19.74 buy point after attempting to break out from a cup base at the end of December.
Shares fell 7.3% so far this year but are holding above their key technical moving averages.
Royal Caribbean rose 2% Wednesday. Shares edged up 0.4% to 136.87 Tuesday, climbing further in the buy zone for its cup base after hitting an all-time high of 138.31 Monday. Royal Caribbean broke out above the 133.77 buy point last Wednesday in strong volume.
RCL stock gained 7.9% in 2024.
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