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Factors Setting the Tone for Carnival's (CCL) Q3 Earnings

Carnival Corporation CCL is likely to have witnessed a year-over-year decline in third-quarter fiscal 2020 earnings. In the last reported quarter, the company delivered a negative earnings surprise of 80.3%.

Trend in Estimate Revision

The Zacks Consensus Estimate for the fiscal third quarter is pegged at a loss of $2.22 per share. In the prior-year quarter, the company reported earnings per share of $2.63. The consensus mark for revenues is $100.4 million, suggesting a decline of 98.5% from the year-ago reported figure.

Carnival Corporation Price and EPS Surprise

Carnival Corporation Price and EPS Surprise

Carnival Corporation price-eps-surprise | Carnival Corporation Quote

Factors at Play

Carnival’s fiscal third-quarter results are likely to be adversely impacted by the coronavirus pandemic. Soft passenger ticket revenues on account of the company’s limited cruise operations are likely to get reflected on the overall  top line. Also, cancellations of cruises due to the ongoing crisis and change in booking patterns are likely to get reflected in the company’s results for the to-be-reported quarter.

Moreover, quarterly earnings are likely to have been negatively impacted by the cash burn. The company’s expected cash burn is $650 million per month. Despite the fact that the virus triggered a catastrophe in terms of lives lost and financial impact, Carnival has been resilient enough to navigate through the uncertain times. Notably, the company took significant actions to preserve cash and secure additional financing to maximize liquidity.

What the Zacks Model Unveils

Our proven model does not predict an earnings beat for Carnival this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here.

Earnings ESP: Carnival has an Earnings ESP +0.30%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are some stocks from the Zacks Consumer Discretionary space that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat in the quarter to be reported:

Penn National Gaming, Inc. PENN has a Zacks Rank #2 and an Earnings ESP of +31.25%.

Boyd Gaming Corporation BYD has a Zacks Rank #3 and an Earnings ESP of +215.01%.

Zynga Inc. ZNGA presently has a Zacks #3 and an Earnings ESP of +25.00%

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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