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Carnival Corporation (NYSE:CCL) Slips Despite Fiscal Q2 EPS Beat

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Carnival Corporation (NYSE:CCL) shares declined Tuesday despite the cruise operator’s report of higher-than-expected fiscal Q2 adjusted earnings and a boost to its 2014 earnings guidance, as the company also forecast Q3 results below analysts’ expectations.  CCL was down 1.3% at $38.88 in recent trading, in a 52-week range of $31.44 to $41.89. 

For the quarter ended May 31, Carnival reported net income of $106 million, or $0.14 per share, up from $41 million, or $0.05 per share, a year earlier. Excluding one-time items, it earned $0.10 per share in the latest quarter, up from $0.07 per share in the prior-year period and above the $0.02 per share expected on average by analysts polled by Capital IQ. Revenue climbed 4.4% to $3.63 billion, in line with analysts’ mean estimate of $3.6 billion. 

CEO Arnold Donald noted the Q2 earnings were above the company’s March guidance due to better-than-expected net revenue yields for most of its cruise brands, as well as lower-than-expected net cruise costs. On a constant-dollar basis, net revenue yields (net revenue per available lower berth day) decreased 2.2%, better than the company’s guidance of down 3% to 4%. Donald said revenue yield improvement for its continental European brands is expected to continue for the remainder of the year. 

The company raised its 2014 EPS forecast to a range of $1.60 to $1.75, up from 2013′s $1.58 per share and its March view of $1.50 to $1.70. The company also said it expects revenue for 2014 to be up from 2013; it hadn’t given an overall revenue outlook in March, but did say it expected 2014 net revenue yields on a constant-dollar basis to be down slightly, a view it reiterated Tuesday. Analysts were recently looking for 2014 EPS of $1.72 on revenue growth of 3.2% to $16 billion. 

However, for Q3, the company forecast earnings of $1.38 to $1.44 per share, well below analysts’ mean estimate of $1.52. Q3 constant-dollar net revenue yields are expected to be flat to down 1%, due primarily to a significant industry capacity increase in the Caribbean. Net cruise costs excluding fuel per ALBD are expected to be 1% to 2% higher on a constant-dollar basis, it added.

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