Those were the years we’d all like to forget.
When charting the cruise industry’s recent financial history, everything nosedives when you reach 2020-21.
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That’s when the Covid-19 pandemic rolled across the world, upended people’s lives, and devastated the cruise industry.
As the disease spread and the number of cases kept increasing, the news was dominated by images of passengers and crew members being trapped at sea. The entire industry was shut down for a period that last roughly 16 months.
The Cruise Lines International Association said that $77 billion was lost due to the pandemic between March and September of 2020 alone.
Some cruise lines downsized, selling off ships, while others went out of business.
Nowadays, it’s a much different story. People continue to cruise, and cruise lines like Carnival are putting up record results.
Carnival continues to grow its sales.
Image source: Carnival Cruise Line
Carnival Cruise Lines CEO: ‘We’re making incredible strides’
It was a grim time for certain, but the industry has been weathering that storm, and the association maintains that “cruising has become one of the safest forms of travel.”
Last year’s passenger volume totaled 31.7 million, surpassing 2019 by 7%, the association said in its 2024 State of the Cruise Industry Report.
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Global cruise capacity is forecast to grow at least 10% from this year to 2028 as cruise lines work toward net-zero emissions by 2050.
The Caribbean, which continues to be the world’s most visited region by cruise, gained almost 1 million new cruise visitors in 2023 compared with 2019, the study said.
Carnival (CCL) shares surged on June 25 after the cruise line operator beat Wall Street’s second-quarter earnings expectations.
The company reported adjusted earnings of 11 cents per share, compared with a loss of 31 cents per share adjusted last year. Revenue increased 17.7% to $5.78 billion, a record for the second quarter.
Analysts surveyed by FactSet were expecting Carnival to report an adjusted loss of one cent per share on $5.68 billion in revenue.
“We have made incredible strides in improving our commercial operations, strategically reallocating our portfolio composition and formulating growth plans, while strengthening even further our global team, the best in the business,” CEO Josh Weinstein said in a statement.
“Off the back of that effort, we closed yet another quarter delivering records, this time across revenues, operating income, customer deposits and booking levels, exceeding our guidance on every measure,” he added.
Carnival lifted its 2024 adjusted net income guidance by $275 million to $1.55 billion, compared with FactSet’s call for $1.37 billion.
The company forecast third quarter adjusted net income to increase 35% to $1.58 billion, ahead of Wall Street’s expectation of $1.54 billion.
For the third quarter, analysts predict earnings increase 29% to $1.11 per share and sales to increase 13% to $7.75 billion.
Carnival Cruise stock analysts reset price targets
The StreetPro’s Bruce Kamich noted that Carnival’s shares were surging on Tuesday following the earnings release, “but the question is whether this a breakout move or just a bounce in a sideways to higher trend.”
Kamich reviewed the company’s share price charts and said “this snapshot in time suggests that CCL is not ready for an around-the-world cruise.”
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JPMorgan raised the firm’s price target on Carnival to $23 from $21 and kept an overweight rating on the shares following the quarterly report.
The company reported a “beat and raise” quarter and said that positive trends seen in the second quarter are expected to continue into third quarter.
The firm said the print aligns with its industry fieldwork pointing to zero signs of demand softening with current lead indicators pointing to pricing power and broad-based strength across regions.
“Carnival’s second quarter results have come into port ahead of expectations despite disruptions to routing in the Red Sea and the temporary closure of its Baltimore port,” said Derren Nathan, head of equity analysis at Hargreaves Lansdown.
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“The upgrade in full-year guidance is underpinned by a record booking position, both in terms of prices and occupancy,” he added. “The early signs for next year are also looking good, although it’s still early days.”
Nathan said that net debt “remains stubbornly high” at $27.7 billion and, with the second quarter typically being the strongest for cash generation, “there may not be too much further movement this year.”
“But the company is treading carefully in terms of newly built ships, which barring a stark deterioration in the economy or unforeseen event such as the Covid-19 pandemic, leaves it well positioned to manage capacity and get on top of its debt over the medium-term,” he said.
“The valuation remains well belong the long-term average so perhaps little surprise that the shares have seen a decent uplift on today’s positive news,” Nathan said.
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