2024-06-20 09:00:00 ET
Summary
- CCL continues to trade sideways over the past few months, with the converging uptrend implying near-term uncertainties and decelerating buying momentum.
- This is despite the cruise liner's robust booking trends, growing customer deposits, higher net yields, and expanding Free Cash Flow generations.
- Much of the headwinds may be attributed to CCL's hefty debts and elevated interest expenses, with the Fed's uncertain pivot posing challenges for its bottom-line improvement.
- As a result of these conflicting developments, we believe that the CCL stock is likely to continue sideways as the management slowly executes its turnaround story over the next two years.
- It may also be better to wait a little longer while getting more clarity about its FQ2'24 performance and near-term booking trends before making a decision.
We previously covered Carnival Corporation & plc ( CCL ) in November 2023, discussing the dramatic reversal in cruise sentiments then, as the stock lost much of its hyper-pandemic gains despite the expanding profitability and growing bookings.
Despite the cruise line's recovering momentum, we maintained our belief that its reversal might take longer than a few more quarters, especially with the overly sticky inflationary pressures and hefty debts....
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For further details see:
Carnival Q2 Preview: Converging Uptrend Implies Near-Term Uncertainties - Reiterate Hold