Carnival Corporation & plc (NYSE:CCL) Quarterly Earnings Preview

• Earnings per share (EPS) of $0.06 and revenue of approximately $5.93 billion are expected for the quarter.
• The company is anticipated to generate $3 billion in free cash flow for fiscal year 2024, with a debt-to-equity ratio of 3.38.
• Bookings for 2025 are already 10-15% higher than historical averages, supporting a positive financial outlook with a target of $6 billion in adjusted EBITDA.

Carnival Corporation & plc (NYSE:CCL) is a major player in the cruise industry, offering a wide range of vacation experiences across its fleet of ships. As the company prepares to release its quarterly earnings on December 20, 2024, analysts are keenly observing its financial metrics. Wall Street estimates an earnings per share (EPS) of $0.06 and revenue of approximately $5.93 billion for the quarter.

Investors are looking beyond these top-line figures to assess Carnival's financial health and operational efficiency. The company is expected to generate $3 billion in free cash flow for fiscal year 2024, despite high capital expenditures. This cash flow is crucial for reducing its debt, which is highlighted by a debt-to-equity ratio of 3.38, indicating a significant reliance on debt financing.

Carnival is also set to benefit from a strong demand for cruises in 2025, with bookings already 10-15% higher than historical averages. This surge is anticipated to support the company's financial performance, aiding in the generation of free cash flow and targeting $6 billion in adjusted EBITDA. This positive outlook positions Carnival to effectively capitalize on the increased demand.

The company's stock has seen a significant rise, buoyed by better-than-expected Q3 2024 results and an upgraded full-year guidance. Although Q4 2024 figures may not be as impressive, the overall performance for 2024 and the positive outlook for 2025 are expected to offset this. The forward price-to-earnings ratio for 2025 suggests the stock is reasonably valued, easing concerns about overvaluation.

Carnival's financial ratios provide further insights into its valuation and financial health. With a price-to-earnings ratio of 20.09 and a price-to-sales ratio of 1.27, investors are paying $1.27 for every dollar of sales. The enterprise value to sales ratio of 2.45 and enterprise value to operating cash flow ratio of 10.09 reflect the company's total valuation compared to its sales and cash flow. However, a current ratio of 0.30 suggests potential liquidity challenges in covering short-term liabilities.