NCLH - Carnival Corp. Q2 Preview: Assessing Debt Impacts On Growth Outlook

2024-06-18 06:45:22 ET

Summary

• Cruise market demonstrates strong consumer spending with expected 10% increase in passengers.
• Carnival's popularity in the Caribbean, Alaska, and Europe zones boosts net yield, but Red Sea tensions impact earnings.
• Carnival's debt load remains a concern, with management focusing on reducing leverage ratios and interest coverage ratios.

Investment Thesis

The cruise industry is still in the midst of a strong consumer spending cycle, as manifested in Carnival Corp.’s ( CCL ) Q1 earnings report in March this year. The company’s management had described their Q1 performance as “fantastic across the board” with “yet another set of records,” as the company registered “record revenues, record bookings, and record customer deposits.” ...

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