Carnival (CCL) Earnings Expected to Grow: What to Know Ahead of Next Week's Release

Wall Street predicts that Carnival (CCL) will see a year-over-year growth in earnings, driven by an expected increase in revenues, when the company releases its financial results for the quarter ending in November 2024. This consensus outlook is crucial for assessing the company's earnings potential, but it is the actual results in comparison to these estimates that may significantly influence the stock's short-term price movement.

The earnings report is scheduled to be announced on December 20, 2024. A positive surprise in key figures could propel the stock higher, whereas any shortfall might lead to a decrease in stock price.

Ultimately, the sustainability of any immediate price shifts and future earnings expectations will heavily rely on management's commentary regarding business conditions during the earnings call. Therefore, it's essential to evaluate the likelihood of a favorable surprise in earnings per share (EPS).

Zacks Consensus Estimate

For the upcoming report, Carnival is projected to report quarterly earnings of $0.08 per share, reflecting a remarkable year-over-year change of +214.3%. Additionally, revenues are expected to reach $5.9 billion, which represents a 9.3% increase from the same period last year.

Estimate Revisions Trend

In the past 30 days, the consensus EPS estimate for Carnival has been revised upward by 53.85% to its current projection. This significant adjustment indicates that analysts have collectively reassessed their predictions based on new information.

However, it’s important to note that this aggregate change may not always align with the direction of revisions made by each individual analyst.

Earnings Whisper

Changes in estimates ahead of an earnings release can provide valuable insights into the business conditions leading up to the results. This insight is integral to the proprietary surprise prediction model known as the Zacks Earnings ESP (Expected Surprise Prediction).

The Earnings ESP metric compares the Most Accurate Estimate with the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is the most recent revision of the consensus EPS figure. This suggests that those analysts adjusting their estimates shortly before the release may have access to the latest information, making their predictions more reliable compared to earlier forecasts.

Thus, a positive or negative Earnings ESP reading indicates the likely variance of actual earnings from the consensus. Evidence suggests that a positive Earnings ESP is associated with a higher chance of an earnings beat, especially when complemented by a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold). Research indicates that stocks with this combination tend to achieve a positive surprise nearly 70% of the time, with a strong Zacks Rank reinforcing the predictive reliability of the Earnings ESP.

Conversely, a negative Earnings ESP does not necessarily mean an earnings miss. Predicting an earnings surprise is notably difficult for stocks showing negative Earnings ESP readings, particularly when they also hold a Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for Carnival?

For Carnival, the Most Accurate Estimate exceeds the Zacks Consensus Estimate, indicating a bullish sentiment from analysts regarding the company's earnings forecasts. This situation has resulted in an Earnings ESP of +10.21%.

Furthermore, Carnival currently holds a Zacks Rank of #3, suggesting that the company is well-positioned to surpass the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?

Analysts also consider how well a company has met consensus estimates in previous quarters when forecasting future earnings. Examining Carnival's past performance can provide valuable context.

In the last reported quarter, analysts expected Carnival to deliver earnings of $1.17 per share. The actual result was $1.27 per share, leading to a positive surprise of +8.55%. Over the last four quarters, Carnival has consistently outperformed consensus EPS estimates.

Bottom Line

An earnings beat or miss is not always the primary factor influencing a stock's price directional change. Stocks can experience declines even after posting earnings beats if there are other investor disappointments. Alternatively, unforeseen positive developments may lead to gains despite an earnings miss.

That said, focusing on companies expected to exceed earnings projections tends to increase the likelihood of successful investments. Therefore, it is advisable to review a company's Earnings ESP and Zacks Rank before its quarterly announcement. Utilize the Earnings ESP Filter to uncover potential investment opportunities before financial performances are reported.

Carnival seems to be a promising candidate for an earnings beat. Nevertheless, investors should also be mindful of various factors influencing their decisions about whether to invest in or avoid this stock ahead of its earnings release.

Earnings, Estimates, Growth