Carnival Reports Strong Q3 Earnings Despite Challenging Q4 Outlook

Carnival, the multinational cruise company, exceeded expectations in their third-quarter earnings report, thanks to robust demand from North America and Europe. However, the company foresees a larger loss in the final quarter of the fiscal year than originally anticipated.

In the three months leading up to August 31, Carnival achieved adjusted earnings of 86 cents per share, with a net income of $1.07 billion. This marks the first time the company has generated positive income since the resumption of guest cruises post-pandemic. Additionally, their quarterly revenue reached an all-time high of $6.9 billion, setting a new record for Carnival.

According to FactSet data, analysts had projected earnings per share of 75 cents on revenue totaling $6.7 billion. While the stock did experience some initial volatility during early trading, it ultimately climbed by 2% soon after the market opened.

Carnival’s full-year guidance also surpassed estimates provided by analysts. Although industry experts had predicted a loss of 16 cents per share, the company is projecting a loss ranging from 4 cents to 12 cents.

However, Carnival’s fourth-quarter forecast may raise concerns among certain investors. The company predicts a loss per share between 10 cents and 18 cents, exceeding the anticipated 11 cents per share projected by analysts.

While cruise stocks flourished during the first half of the year due to increased traveling and high demand during the summer, they have faced significant challenges in recent months, along with the rest of the travel industry. Rising fuel prices and shifting investor focus beyond the summer season have impacted the sector’s performance.

Since July, Carnival’s stock has witnessed a decline of 23%, yet it remains 79% higher for the year as of Thursday’s closing numbers. In early trading on Friday, the shares demonstrated a 4% increase.

In comparison, Royal Caribbean (RCL) has experienced a 90% increase, and Norwegian Cruise Line Holdings (NCLH) has seen a rise of 38%.

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