On Monday, Stifel reaffirmed a Buy rating on shares of Carnival Corporation (NYSE:CCL) with a price target of $27.00. The company's financial results for the third fiscal quarter of 2024 showed gross and net revenue figures at $7.9 billion and $6.1 billion, respectively, slightly surpassing the analyst's projections that matched the consensus of $7.8 billion and $6.0 billion. Carnival's fuel expenses were reported at $515 million, equivalent to $670 per metric ton, and net interest expenses amounted to $412 million.
Adjusted EBITDA for the quarter reached $2.8 billion, exceeding the guidance by $160 million. This figure was also higher than Stifel's estimate, which was in line with the consensus at $2.7 billion. The company's earnings per share (EPS) on both a GAAP and adjusted basis came in at $1.26 and $1.27, respectively, outperforming the forecasted $1.17 EPS.
Carnival ended the third fiscal quarter with customer deposits totaling $6.8 billion, marking a decrease of approximately $1.5 billion from the end of the second fiscal quarter due to seasonal factors. However, this represents an 8% year-over-year increase, setting a new record for the third quarter. In light of these results, Carnival management has updated its full-year 2024 guidance. Adjusted EBITDA is now anticipated to be around $6.0 billion, up from the previous estimate of approximately $5.83 billion.
Furthermore, the company has adjusted its expectations for constant currency net yield growth to 10.4%, an increase from the prior guidance of 10.25%. Net cruise costs excluding fuel are projected to grow by 3.5%, which is a decrease from the previous forecast of 4.5%. Lastly, management has indicated that it expects to conclude the fiscal year with net leverage nearing 4.5 times, signifying a substantial improvement of approximately 2.0 times from the fiscal year 2023.
In other recent news, Carnival Corp has reported a surge in cruise demand, resulting in an increase in its annual profit forecast for the third time this year. The company's third-quarter revenue reached $7.90 billion, exceeding market expectations. Carnival has adjusted its 2024 profit per share forecast to $1.33, up from the previous estimate of $1.18, and raised its full-year net yield projection to 10.4%.
Analyst firms Goldman Sachs, BofA Securities, Stifel, and Mizuho Securities have all reaffirmed their positive ratings on Carnival shares, citing strong earnings, stable demand, and a robust outlook. Goldman Sachs, for instance, has reaffirmed its Buy rating on the company's shares following a third-quarter earnings report that exceeded market expectations.
Carnival has also announced the expansion of its fleet with three new liquefied natural gas (LNG)-powered ships, scheduled for delivery in 2029, 2031, and 2033. The company is in the process of strategic brand consolidation, with plans to sunset P&O Cruises Australia and integrate it into Carnival Cruise Line.
Moreover, Carnival Corporation is developing a new destination, Celebration Key, expected to launch in 2025. These are recent developments indicating Carnival Corporation's continued growth and improved returns.
InvestingPro Insights
Carnival Corporation's recent financial performance aligns with several key insights from InvestingPro. The company's revenue growth of 34.02% over the last twelve months reflects its strong recovery in the cruise industry. This growth is particularly noteworthy given Carnival's status as a prominent player in the Hotels, Restaurants & Leisure industry, as highlighted by InvestingPro Tips.
The company's profitability, as mentioned in the article, is further supported by InvestingPro data showing a gross profit margin of 51.17% and an operating income margin of 12.08% for the last twelve months. These figures underscore Carnival's ability to generate substantial profits from its operations, which is crucial for its ongoing recovery and future growth.
InvestingPro Tips also indicate that Carnival is trading at a low P/E ratio relative to its near-term earnings growth, with a current P/E ratio of 22.35. This suggests that the stock may be undervalued considering its growth prospects, which aligns with Stifel's Buy rating and $27 price target.
It's worth noting that InvestingPro offers 10 additional tips for Carnival Corporation, providing investors with a more comprehensive analysis of the company's financial health and market position.
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