Carnival Stock Earns Its All-Time Highs Again

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Quarterly reports are becoming a welcome port of call for Carnival Corporation & plc (NYSE: CCL) (NYSE: CUK) investors. Shares hit fresh all-time highs late last week after the world's largest cruise line operator posted its latest quarterly results. We saw the same scenario play out three months earlier when it revealed blowout fiscal first-quarter results.

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Carnival's revenue rose 6% to $3.9 billion. Profitability declined, but if we back out unrealized gains and losses on fuel derivatives and other net charges -- a fair adjustment since Carnival makes big bets to hedge its volatile fuel costs -- net income rose to $0.52 a share from $0.49 a share a year earlier. The cruise industry in general and Carnival in particular are coasting in the right direction these days.   

The love boat

Carnival's doing better than its top-line showing suggests. Folks are paying more for their bookings, and Carnival has more berths to fill. However, negative foreign currency swings are weighing on reported revenue.

Gross revenue yields -- an important metric in the cruising industry that is basically the revenue per available lower berth day -- rose 2.7%, but in constant currency the net revenue yields would've moved 5.1% higher. Carnival's guidance on that basis was calling for an increase of just 2.5% to 3.5%. Gross cruise costs excluding fuel rose just 1.5%, at the low end of its earlier guidance range.

Carnival's fleet is growing. Majestic Princess, its first ship tailored for the Chinese market, came on line. Carnival also continues to update its fleet of Carnival and Princess ships to incorporate the necessary tech for its Ocean wearable medallions. The tech could be a game changer, as passengers using chip-backed medallions and Bluetooth connectivity can do everything from order poolside drinks to customize cabin settings as they head back to their rooms.

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The near-term future is bright. Advance bookings for the balance of 2017 are running ahead of where they were a year earlier and at higher price points. Carnival is once again boosting its bottom-line outlook. It's now targeting an adjusted profit per share of $3.50 to $3.70 for all of fiscal 2017. Three months ago, it was forecasting between $3.50 and $3.70 in adjusted earnings per share, and that was up from the initial range of $3.30 to $3.60 per share it issued six months ago. Wall Street obviously likes companies that perpetually tweak their outlook higher. Carnival is naturally still at the mercy of the ups and downs of the international travel market, but for now, it's hitting all of the right waves. 

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.