Carnival Corp (NYSE:CCL) is up over 25% so far this year. And after strong Carnival earnings, CCL is looking good going forward.
CCL stock posted better-than-expected second-quarter fiscal 2017 results, wherein both Carnival earnings and revenues beat the Zacks Consensus Estimate. Meanwhile, Carnival stock anticipates earnings in the band of $3.60 to $3.70 per share for fiscal 2017 (previous projection was in the range of $3.50 to $3.70).
Notably, this Zacks Rank #2 (Buy) company’s shares have outperformed the Zacks categorized Leisure & Recreation Services industry year to date. The stock has gained 26.7%, outpacing the industry’s rally of 18.5%, during the same period.
In fact, the company continues to reflect strength in several areas, and is thus expected to continue performing well in the quarters ahead.
Key Growth Drivers for CCL Stock
Strong Brand Recognition: Carnival is the largest and historically the most profitable cruise operator in the world. With the strength and diversity of its brands and itineraries, the company boasts a broader passenger base among potential and repeat cruise vacationers. Additionally, its leading position in the market offers a cost advantage, allowing Carnival to generate higher return on investment than smaller companies.
Launch of New Ships: Of late, Carnival has been continually introducing new flagships to formulate measured capacity growth over time. This also allows its global fleet to meet escalating demand for cruise vacations in every region of the world. In fact, currently Carnival has 19 new ships planned to be delivered between 2017 and 2022.
We note that the launch of new ships is also part of the CLL stock long-term strategy to build state-of-the-art vessels that aid in providing guests with a remarkable vacation experience at an exceptional value.
Given burgeoning demand for cruise travel in 2017, the addition of new ships to its fleet bodes well.
Exploring Foreign Shores: Carnival has adopted a strategy to grow beyond its familiar itineraries and capitalize on new markets. The Asian source market for cruises is expected to continue growing significantly, as it becomes more consumer-driven. Carnival is especially optimistic about growth prospects of the Japanese and Australian markets.
These countries boast a rapidly developing cruise market with passenger numbers soaring over the last few years and expected to increase further. It is to be noted that a growing middle-class with high disposable income makes these markets an attractive bet for Carnival. Moreover, an increasing number of ports and tourist destinations in Asia present tremendous growth opportunity for the cruise industry. Going forward, CCL stock expects to continue profitably growing its presence in China and throughout Asia.
Meanwhile, CCL stock is continually on the lookout for sailing to new destinations in order to drive demand for cruising. Already, Carnival Corp had sailed to markets like Cuba, Mexico and Bermuda in 2016, where demand is expected to ramp up and boost revenues significantly.
Initiatives Undertaken to Boost Revenue Yields: Carnival continues to drive revenue yield growth by creating demand in excess of measured capacity growth through its ongoing guest experience, marketing and public relations effort.
Notably, the company is set to launch the world’s first interactive guest experience platform – Ocean Medallion – on Regal Princess in the beginning of fall this year. Also, Carnival Corp expects to complete the full rollout of its yield management system by year end, which will aid in driving incremental revenue yields over time. The new technology is expected to contribute in fiscal 2017, and even more meaningfully in fiscal 2018.