Why Is Carnival (CCL) Down 9.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Carnival (CCL). Shares have lost about 9.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Carnival due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Carnival Posts Wider-than-Expected Q1 Loss, Bookings Up

Carnival reported first-quarter fiscal 2021 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. The top line lagged the consensus estimate for the fourth straight quarter. Notably, cruise cancellations due to the coronavirus pandemic continue to affect the company results.

The company reported loss per share of $1.79, wider-than the Zacks Consensus Estimate of a loss of $1.66. In the year-ago quarter, the company had reported earnings per share of 22 cents. Revenues amounted to $26 million, which fell short of the consensus mark of $108 million. The top line also declined sharply from the prior-year quarter’s figure of $4.8 billion. The company reported adjusted net loss of $2 billion in the first quarter.

Liquidity and Cash Burn

The company ended the quarter with cash and cash equivalents of $11.5 billion. The company announced that it has enough liquidity to return to full operation. It further added that it will be pursuing refinancing opportunities to decrease interest expense and extend maturities.

Moreover, average monthly cash burn in the quarter was $500 million, marginally better than the company’s expectation. It anticipates average monthly cash burn in first half of 2021 to be nearly $550 million, which is better-than previously anticipated.

Bookings Update

The company stated that cumulative advanced bookings for full year 2022 are ahead of a very robust 2019 as of Mar 21, 2021. These bookings were achieved by negligeable advertising and marketing.

The company’s CEO further said “Booking volumes are accelerating. During the first quarter of 2021 they were approximately 90% higher than volumes during the fourth quarter of 2020 reflecting both the significant pent up demand and long-term potential for cruising.”

The company refrained from providing earnings guidance for fiscal 2021 due to the pandemic. Pause in operations will continue to hurt the company’s liquidity, results and results. The company anticipates to report a net loss on both U.S. GAAP and adjusted basis for the second quarter and full year ending Nov 30, 2021.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -6.74% due to these changes.

VGM Scores

Currently, Carnival has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Carnival has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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