Shares of Carnival Corp. experienced a decline in choppy trading after the cruise operator reported its first quarterly profit since before the COVID-19 pandemic. The company saw record revenue and bookings due to significantly elevated demand. However, Carnival provided a downbeat outlook, leading to concerns among investors. The stock initially swung between gains and losses before ultimately plunging 5.1% in recent morning trading, reaching a 3 1/2-month low. This decline puts the stock on track to endure a fifth-straight weekly loss.
Despite the negative outlook, Carnival Corp. managed to swing to a fiscal third-quarter net income of $1.07 billion, or 79 cents per share, compared to a loss of $770 million, or 65 cents per share, during the same period last year. Adjusted earnings per share for the quarter amounted to 86 cents, exceeding the FactSet consensus of 75 cents. The company had not reported a net profit since November 2019, and the adjusted profit achieved in this quarter was the first since February 2020. Carnival’s revenue also grew by 59.2% to $6.85 billion, surpassing the FactSet consensus of $6.71 billion.
The company highlighted that its strong performance was driven by robust demand in its North America, Australia, and Europe segments. Booking volumes remained at significantly elevated levels, with third-quarter total bookings nearly 20% higher than in 2019. Despite these positive indicators, Carnival’s outlook for the fourth quarter was pessimistic. The company expects an adjusted per-share loss of 18 cents to 10 cents, wider than the current FactSet consensus of 8 cents a share. Additionally, Carnival revised its guidance for adjusted Ebitda and adjusted cruise costs, causing concerns among investors about the company’s future profitability.