Core Viewpoint - The company, Carnival Corp, is effectively managing its substantial debt incurred during the COVID-19 pandemic, presenting a compelling investment opportunity despite market skepticism [1][5][19]. Company Overview - Carnival Corp operates a fleet of 29 ships and owns 93 different vessels across various brands, including Princess, Holland America, and Cunard [4][5]. - The company has accumulated approximately $24 billion in long-term debt due to the pandemic, resulting in annual interest payments of around $2 billion [5][16]. Financial Performance - In the first quarter, Carnival reported record revenue of $5.8 billion, a 7.5% increase year-over-year, and doubled its operating income [7][8]. - Advanced bookings for the fiscal year are at record highs, leading to total customer deposits of $7.3 billion [8]. - The company raised its earnings per share guidance from $1.70 to approximately $1.83, with analysts projecting a 4% sales growth for the year [8][19]. Industry Trends - The cruise industry is experiencing a resurgence, with the Cruise Lines International Association forecasting 37.7 million ocean cruise passengers in 2025, a 9% increase from the previous year [13]. - The leisure cruise market is expected to grow at an annualized rate of nearly 6% through 2034, driven by increasing demand and limited capacity [15]. Debt Management - Carnival's interest payments are projected to decrease from over $2 billion in 2023 to under $1.8 billion in 2024, as the company continues to pay down its debt [17][18]. - The company has reduced its long-term debt by nearly $2.5 billion over the past year while still reporting profits [17]. Market Position - Carnival's stock is trading at less than 13 times its earnings guidance, presenting a significant value opportunity compared to its profitability [19]. - Analysts maintain a strong buy rating for Carnival, with a consensus price target of $27.69, indicating a potential upside of nearly 20% from its current price [20].

Group 1: Stock Performance - Carnival (CCL) closed at $23.61, reflecting a +1.42% change from the previous day's closing price, outperforming the S&P 500 which had a loss of 0.03% [1] - Prior to the recent trading session, Carnival shares had gained 1.66%, surpassing the Consumer Discretionary sector's loss of 0.61% and the S&P 500's gain of 0.6% [1] Group 2: Earnings Expectations - Carnival is expected to report an EPS of $0.24, representing an increase of 118.18% from the same quarter last year [2] - Revenue is anticipated to be $6.21 billion, indicating a 7.35% increase compared to the prior year [2] Group 3: Annual Estimates - For the annual period, earnings are projected at $1.88 per share and revenue at $26.1 billion, reflecting increases of +32.39% and +4.3% respectively from the previous year [3] - Recent analyst estimate revisions suggest a positive outlook for Carnival's business [3] Group 4: Zacks Rank and Valuation - Carnival currently holds a Zacks Rank of 2 (Buy), with the Zacks Consensus EPS estimate shifting 1.7% upward over the past month [5] - The Forward P/E ratio for Carnival is 12.4, which is lower than the industry average of 19.54 [6] - Carnival's PEG ratio stands at 0.54, compared to the industry average PEG ratio of 1.49 [6] Group 5: Industry Context - The Leisure and Recreation Services industry, which includes Carnival, has a Zacks Industry Rank of 71, placing it in the top 29% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Viewpoint - Carnival (CCL) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the importance of changing earnings estimates, which are closely correlated with stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [4][6]. - The recent upgrade for Carnival reflects an improved earnings outlook, likely leading to increased buying pressure and a rise in stock price [3][5]. Earnings Estimate Revisions - For the fiscal year ending November 2025, Carnival is projected to earn $1.88 per share, consistent with the previous year's figure, while the Zacks Consensus Estimate has increased by 6.9% over the past three months [8]. Zacks Rank System - The Zacks Rank system categorizes stocks based on earnings estimate revisions, with only the top 20% of stocks receiving a "Strong Buy" or "Buy" rating, indicating superior potential for market-beating returns [9][10].

Core Points - Carnival Cruise Line is set to launch a new loyalty program named Carnival Rewards™ in June 2026, introducing a points-based system with personalized perks and new ways to earn status [1][2][3] Group 1: Program Features - The Carnival Rewards program will feature a dual-earning structure, allowing guests to accumulate both Carnival Rewards points and status qualifying stars, moving away from the current model that focuses solely on the number of nights sailed [3][4] - Guests will earn points on eligible purchases, including cruise fares and onboard activities, providing more opportunities to achieve higher status levels based on overall spending [3][4] - The program will be closely linked to the Carnival Rewards Mastercard, enabling cardmembers to earn points and status more rapidly through everyday spending [3][4] Group 2: Transition and Status Retention - Existing loyalty status from the current Very Important Fun Person (VIFP) program will carry over into the new Carnival Rewards program for a two-year period, ensuring that current members' status is honored [5] - Diamond members will retain their status for an extended period of six years, through May 31, 2032, allowing ample time for members to adapt to the new rewards system [5] - Current cardmembers will have their Fun Points converted to Carnival Rewards points upon the launch of the new program [5] Group 3: Customer Engagement and Information - Carnival Cruise Line will provide detailed information and tools for guests to track their status and point balances, as well as tips to maximize rewards under the new system [6] - Current loyalty members will receive updates via email throughout the transition process leading up to the launch [6]

The market expects Carnival (CCL) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended May 2025. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report. On the other hand, if they miss, the st ...

Core Insights - Carnival Corporation & plc (CCL) has demonstrated strong fiscal 2025 performance, emphasizing disciplined cost control as a key theme appreciated by investors [1] - The company reported robust revenue growth, record bookings, and solid net yield gains, with effective management of operating costs driving margin expansion [1] Financial Performance - In Q1 fiscal 2025, adjusted cruise costs per available lower berth day (ALBD) decreased by 1.9% year-over-year to $133.50, while adjusted cruise costs excluding fuel per ALBD declined by 0.3% to $113.76 [2] - CCL achieved $1.2 billion in EBITDA, reflecting a 38% year-over-year increase, with operating and EBITDA margins exceeding 2019 levels [3] - The minimal rise in unit costs, alongside a robust net yield growth of 7.3%, contributed to a near-doubling of operating income to $543 million compared to $267 million in the prior year [3] Future Projections - CCL projects EBITDA for fiscal 2025 to reach $6.7 billion, indicating a nearly 10% increase over 2024 levels, supported by strong forward bookings and limited capacity additions [4] - The company's focus on cost efficiency is expected to bolster its margin profile and sustain profit growth in the coming years [4] Industry Comparison - Royal Caribbean Cruises Ltd. (RCL) also reported a 0.3% year-over-year decline in net cruise costs excluding fuel per Available Passenger Cruise Days (APCD) to $129.54, attributing this to timing benefits and efficiency focus [5] - Norwegian Cruise Line Holdings Ltd. (NCLH) reported gross cruise costs per capacity day of approximately $297, slightly down from $300 in the prior year, with adjusted EBITDA surpassing prior guidance [7][8] Stock Performance and Valuation - CCL shares have gained 11.4% over the past three months, outperforming the industry growth of 6.9% [10] - CCL trades at a forward price-to-earnings ratio of 11.21X, significantly below the industry average of 17.58X [11] - The Zacks Consensus Estimate for CCL's fiscal 2025 and 2026 earnings indicates a year-over-year increase of 31.7% and 13.1%, respectively, with EPS estimates having risen in the past 30 days [12]

Economic Overview - Inflation is cooling at a faster rate than expected, with the consumer price index (CPI) rising only 0.1% sequentially in May, lower than the consensus estimate of 0.2% [3][9] - Year-over-year, CPI increased 2.4%, aligning with analysts' expectations, while core CPI rose 0.1% sequentially and 2.8% year-over-year, both lower than expected [3][4] Consumer Discretionary Stocks - Positive sentiment in the market suggests investing in consumer discretionary stocks such as Carnival Corporation & plc (CCL), Fox Corporation (FOX), Netflix, Inc. (NFLX), and Interface, Inc. (TILE) [2][8] - These stocks have seen positive earnings estimate revisions in the last 60 days, with each carrying a Zacks Rank 2 (Buy) [2] Company-Specific Insights Carnival Corporation & plc - Carnival Corporation operates as the largest cruise operator globally, carrying nearly half of the global cruise guests [10] - The expected earnings growth rate for the current year is 31.7%, with the Zacks Consensus Estimate for current-year earnings improving by 1.1% over the last 60 days [10] Fox Corporation - Fox Corporation produces and distributes news, sports, and entertainment content, with brands including FOX News and FOX Sports [11] - The expected earnings growth rate for the current year is 32.4%, with the Zacks Consensus Estimate for current-year earnings improving by 1.1% over the past 60 days [11] Netflix, Inc. - Netflix is a pioneer in the streaming space, aggressively building its portfolio of original shows to maintain its leading position [12] - The expected earnings growth rate for the current year is 27.7%, with the Zacks Consensus Estimate for current-year earnings improving by 3.3% over the past 60 days [12] Interface, Inc. - Interface is the world's largest manufacturer of modular carpets, committed to sustainability while enhancing shareholder value [13] - The expected earnings growth rate for the current year is 8.2%, with the Zacks Consensus Estimate for current-year earnings improving by 2.6% over the past 60 days [13]

Group 1 - Carnival Corporation is expected to announce Q2 earnings on June 24, with an anticipated earnings per share of $0.24, up from $0.11 in the same quarter last year [2] - The consensus revenue estimate for the quarter is $6.2 billion, reflecting a growth of approximately 7.3% compared to the previous year, driven by robust demand for leisure cruising post-Covid-19 [2] - The company's revenue growth is supported by increased capacity, heightened onboard revenues, and recent price hikes, alongside a focus on fleet optimization leading to strong operational performance [2] Group 2 - Carnival's current market capitalization is $31 billion, with revenue over the last twelve months reported at $25 billion, and operational profits of $3.8 billion, resulting in a net income of $2.1 billion [3] - Historical data indicates that Carnival has had 19 earnings data points over the past five years, with positive one-day returns occurring approximately 53% of the time, although this percentage drops to 50% when considering the last three years [5] - The median of the positive one-day returns is 5.4%, while the median of the negative returns is -2.5% [5]

Core Viewpoint - The comparison between Carnival (CCL) and Atour Lifestyle Holdings Limited Sponsored ADR (ATAT) indicates that CCL currently offers better value for investors based on various financial metrics and rankings [1][3][7]. Valuation Metrics - CCL has a forward P/E ratio of 12.63, while ATAT has a forward P/E of 20.03, suggesting that CCL is more attractively priced [5]. - The PEG ratio for CCL is 0.55, compared to ATAT's PEG ratio of 0.92, indicating that CCL may offer better value relative to its expected earnings growth [5]. - CCL's P/B ratio stands at 2.99, significantly lower than ATAT's P/B ratio of 9.91, further supporting the notion that CCL is undervalued [6]. Zacks Rank and Value Grades - CCL holds a Zacks Rank of 2 (Buy), while ATAT has a Zacks Rank of 3 (Hold), indicating a stronger earnings outlook for CCL [3][7]. - CCL has a Value grade of A, whereas ATAT has a Value grade of C, reflecting CCL's superior valuation metrics [6].

Core Insights - Carnival Corporation & plc (CCL) is trading at a discount compared to its industry, with a forward 12-month price-to-earnings (P/E) ratio of 11.90X, below the five-year average and the industry average of 18.11X [2][3][8] - The company has experienced a decline in share price of 5.4% year-to-date, while peers like Royal Caribbean have gained 15.2% [4] Valuation and Performance - CCL's forward P/E ratio of 11.90X indicates a discounted valuation compared to industry peers such as Royal Caribbean (16.18X), Norwegian Cruise Line (8.44X), and OneSpaWorld (18.89X) [3][8] - The Zacks Leisure and Recreation Services industry has lost 1.8% year-to-date, while the Consumer Discretionary sector has gained 5.8% [4] Growth Drivers - Carnival is capitalizing on strong demand with record advance bookings and higher pricing power, projecting a 32% increase in EPS for 2025 [8][10] - The company focuses on exclusive cruise destinations, enhancing guest experiences and pricing power through proprietary locations like Half Moon Cay [11] - Fleet modernization efforts are improving energy efficiency and expanding revenue opportunities, lowering costs and enhancing returns on invested capital [12] - Land-based operations in Alaska complement cruise offerings, allowing for unique vacation packages and maintaining strategic control over growth [13] Earnings Estimates and Analyst Outlook - The Zacks Consensus Estimate for Carnival's fiscal 2025 EPS has been revised upward from $1.85 to $1.87, reflecting strong analyst confidence [14] - Analysts forecast a 31.7% jump in fiscal 2025 earnings for Carnival, compared to growth rates of 30.7% for Royal Caribbean and 12.1% for Norwegian Cruise [17] - The average price target for Carnival stock is $28.21, indicating a potential upside of 19.7% from the last closing price of $23.57 [18] Broker Sentiment - Carnival holds an average brokerage recommendation of 1.58, indicating a favorable outlook with 18 Strong Buy recommendations from 26 firms [19] - The positive analyst support and a wide range of price targets highlight optimism regarding Carnival's recovery and long-term potential [20] Investment Consideration - Carnival's current valuation presents an attractive opportunity for investors, supported by strong booking momentum and strategic investments [21] - Given the bullish broker sentiment and consensus price targets, investors may consider initiating or adding to positions at current levels [22]