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Carnival Issues Downbeat Fiscal Third-Quarter Earnings Outlook; Sees Robust Demand, Booking Trends

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Carnival Issues Downbeat Fiscal Third-Quarter Earnings Outlook; Sees Robust Demand, Booking Trends

Carnival (CCL) provided a fiscal third-quarter earnings outlook below Wall Street's estimates on Tuesday, although the cruise operator recorded a surprise year over year profit increase in the previous three-month period and forecast robust demand and booking trends.

The company anticipates adjusted earnings of about $1.35 a share for the ongoing quarter, while the current consensus on FactSet is for $1.42. Capacity is pegged to grow by 1.5% from the prior-year period.

Carnival shares dropped 5.8% in Tuesday trade. The stock has lost 6.8% so far this year.

However, Chief Executive Josh Weinstein said the company's booked position for the second half is higher than last year, "at historically high prices" in constant currency, despite operating amidst extreme geopolitical headwinds that mainly impacted its booking trends for European deployments especially in the Mediterranean region, which was closest in proximity to the Middle East conflict."

The US and Iran last week signed a memorandum of understanding to end their war and reopen the crucial Strait of Hormuz.

"We are now 93% booked for the year with less inventory remaining for sale than this time last year and are on track for record net yields in the second half of 2026," according to Weinstein.

For the quarter ended May, Carnival's adjusted EPS rose to $0.41 from $0.35 the year before, defying the Street's view for a decline to $0.34. Overall revenue improved to $6.66 billion from $6.33 billion, but fell short of the average analyst estimate of $6.69 billion.

"We achieved another quarter of record results, marking our twelfth consecutive quarter of record net yields and delivering over 20% more to the bottom line, overcoming extreme geopolitical headwinds and nearly 30% higher fuel costs," Weinstein said.

Occupancy remained flat at 104% on a yearly basis. Customer deposits reached an "all-time high" of $9 billion, amid robust demand, according to the company.

For fiscal 2026, Carnival now expects adjusted EPS of around $2.22, up from its prior guidance of $2.21. The Street is looking for $2.23. Capacity growth is seen at 1%, compared with the previous outlook for an increase of 0.9%.

"As conditions continue to normalize, we expect to benefit from the strong demand, pricing and operational improvements embedded throughout our business," according to Weinstein. "Recent booking trends already suggest that we are beginning to see a reversal of these headwinds, reinforcing our confidence in both the near-term outlook and the long-term earnings power of the business."

Looking further ahead, the company sees strong demand for 2027 and beyond, the CEO added. Booking volumes and prices for future sailings have been "running ahead" of last year's levels since March, including a "substantial increase in bookings for our European deployments next year," Weinstein noted.

Price: $28.36, Change: $-1.83, Percent Change: -6.06%

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