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The company is scheduled to share its latest financial results on Tuesday, September 29. Analysts expect earnings of about $1.36 per share on revenue of roughly $8.40 billion. While the company has a recent history of beating these targets, the focus for long-term owners will be on two things: whether high fuel costs are eating into profits and if customer deposits for future cruises remain at record levels. These deposits act as a critical interest-free source of funding for the business while it works to pay down its debts.
US retail sales grew more than expected in August as consumers spent more across almost every category. This resilience is important for Carnival because it shows that households are still willing to spend on non-essential items even while paying more for gasoline.
For a cruise operator, steady consumer spending is the engine that keeps ships full and allows for higher ticket prices. As long as the broader economy remains healthy, Carnival can continue using its record-high bookings to pay down its debt and fund its operations.
Source: Bloomberg Markets and Finance
Carnival has opened bookings for its newest ship, the Carnival Tropicale, which is scheduled to begin sailing from Galveston in 2028. The ship is the final vessel in the company's Excel-class, a group of large ships designed to carry more passengers more efficiently. Opening bookings years in advance is a standard move that helps the company collect customer deposits early. These deposits act as interest-free cash that Carnival can use to fund its operations and pay down debt while it waits for the ship to be built.
Source: PRNewsWire
Deutsche Bank lowered its price target for the cruise operator to $29, down from a previous target of $34. This move follows a period where rising fuel costs and regional tensions have weighed on the travel sector. Even with the lower target, the firm's outlook remains higher than the current stock price of about $22. The average target among all analysts tracking the company sits at $36, suggesting most still expect the business to grow as it works through its heavy debt load.
Source: Deutsche Bank
Oil prices pushed higher on Monday after Saudi Arabia shut its East-West crude pipeline. This pipeline is a critical alternative route for moving oil when the Strait of Hormuz is blocked or dangerous. The closure follows several attacks on the line, and a planned meeting to discuss safe shipping lanes in the region has been postponed.
For a cruise operator like Carnival, fuel is one of the largest daily costs. When oil prices rise due to conflict or pipeline shutdowns, it leaves less profit on every ticket sold. This adds to a difficult stretch for the company as it manages rising fuel expenses alongside its efforts to pay down debt.
Source: Bloomberg Markets and Finance
Management has cleared their own profit targets for eight straight quarters, proving they have a firm handle on costs even as the business scales back up.
| Expectation | |
|---|---|
| EPS | $1.36 |
| Revenue | $8.40B |
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