Carnival Corporation (CCL) is Drawing Interest from Investors: Important Information You Need to Know

Carnival Corporation (CCL): Key Factors for Investors

Carnival Corporation (CCL) has recently become one of the most popular stocks searched on Zacks.com. If you're considering investing, it's important to look at several elements that could impact its future performance.

Recent Stock Performance

In the past month, Carnival's stock has climbed 10.4%, while the Zacks S&P 500 composite index slipped by 0.3%. The Leisure and Recreation Services sector, which includes Carnival, saw a modest gain of 0.4% during the same period. The main question for investors is where the stock might head next.

What Drives Stock Movements?

While news stories or speculation can cause short-term price swings, long-term stock performance is typically determined by fundamental factors. Understanding these can help investors make informed decisions about holding or buying shares.

Earnings Estimate Trends

At Zacks, changes in projected earnings are a primary focus, as the present value of future earnings is a key driver of a stock’s fair value. Our approach centers on how analysts update their earnings forecasts in response to new business developments. When these estimates rise, the stock’s fair value generally increases, often leading to higher prices as investors buy in. Studies have shown a strong link between shifts in earnings estimates and short-term price movements.

For the current quarter, Carnival is expected to report earnings of $0.18 per share, a 38.5% increase from the same period last year. Over the past month, the Zacks Consensus Estimate has not changed.

Looking at the full fiscal year, the consensus estimate stands at $2.54 per share, up 12.9% from the previous year, with no change in the last 30 days. For the next fiscal year, analysts expect $2.79 per share, a 9.8% increase, with a slight 0.1% upward revision in the past month.

The Zacks Rank, a proprietary rating tool with a strong track record, incorporates these earnings estimate revisions along with three other related factors. Currently, Carnival holds a Zacks Rank #3 (Hold), suggesting a neutral outlook in the near term.

Forward 12-Month EPS Estimate

Revenue Outlook

While earnings growth is a strong indicator of financial health, sustained revenue growth is essential for long-term profitability. For the current quarter, analysts expect Carnival to generate $6.1 billion in sales, a 5% increase year-over-year. Full-year revenue projections are $27.84 billion for this year (up 4.6%) and $28.82 billion for next year (up 3.5%).

Recent Results and Earnings Surprises

In its latest quarter, Carnival reported $6.33 billion in revenue, a 6.6% increase from the previous year. Earnings per share came in at $0.34, compared to $0.14 a year earlier. Revenue was slightly below the Zacks Consensus Estimate by 0.49%, but EPS exceeded expectations by 36%.

Over the past four quarters, Carnival has surpassed consensus EPS estimates each time and exceeded revenue estimates in three out of four quarters.

Valuation Analysis

Evaluating a stock’s valuation is crucial for making sound investment choices. Comparing current valuation ratios—such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF)—to historical averages and industry peers helps determine if a stock is undervalued, fairly valued, or overvalued.

The Zacks Value Style Score, which assesses both traditional and alternative valuation metrics, assigns Carnival an “A” grade, indicating it is trading at a discount compared to its peers.

Conclusion

The information above, along with additional resources on Zacks.com, can help you decide whether the current attention on Carnival is justified. With a Zacks Rank #3, the stock is expected to perform similarly to the broader market in the near future.

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