North America’s most popular cruise line, Carnival Corp, which runs 24 different Carnival Cruise Line ships, is showing signs of recovery from the COVID-19 pandemic and appears to have a bright future ahead.
It is important to keep in mind that at the time of writing in the second last week of May, Carnival Corp Stock was still down just over 38 year-to-date. However, as of the 20th, the share price trend has turned and is gaining strength.
Perhaps it was the appointment of a new CEO, or the higher company-wide prices instated from the beginning of the month, or even just the shift people are making back to tourism. Either way, the tour operator titan is doing surprisingly well.
Few Companies Hit Harder Than Carnival Cruises
The cruise line industry was one of the hardest hit by the coronavirus pandemic. Owners were forced to say goodbye to billions of dollars in revenue as cruise ships remained in dock for over a year.
The numbers reveal the harsh reality of the cruise line industry. In 2019, the cruise line industry’s annual revenue was seated at approximately $27.5 billion. Even though 2021 was a year of recovery during which period the industry’s annual revenue almost doubled, it still only reached roughly $6.65 billion.
This being said, the demand for cruises is rising and looks to be peaking as we transition from 2022 to 2023.
Desire To Cruise Rising Steadily
Information from Cruise Lines International Association shows that the desire to cruise is currently above the level it was just before the pandemic hit. Carnival has 75% of its ships running and has cut away inefficient, older cruise liners.
At the present moment, CCL stock looks to be a good medium-term investment. The current price as of the end of May is at a point that is unlikely to slip much further nor spike significantly in the immediate future.
Carnival is bullish but remains at a great price for those looking to procure stock or enlarge their investment. The company just went back into full operations mode on May 2nd, becoming the first major US cruise line company to do so.
Still Not Total Smooth Sailing For Carnival Corp
As of the end of March 2022, Carnival had attained 54% occupancy. Sales for the fourth quarter of 2022 were at $1.3 billion, which shadows the measly $34 million in sales made during the same period of 2021.
Despite regaining many of its travelers, the company still reports an operating loss of $1.876 million for the first quarter of 2022.
Additionally, Carnival borrowed $2.3 billion, which will be paid in semi-annual installments by 2034. This brings the firm’s total up to about $20 billion in new debt over the last two years.
CCL Stock Forecast
Anyone considering a Carnival Cruises investment will be looking for the most significant gains to occur in 2023.
Current analytics show that the earnings per share will remain negative for the whole of the year. Towards the end of May, after a small rise in Carnival’s share price, the EPS estimates for the quarter averaged -1.06 with a best-case scenario of -0.89 and a low estimate of -1.37.
By 2023, we should see an EPS of at least 0.9 with a high estimate of 2.2, which may well be worth waiting for.
Wall Street analysts have set an average price target of $21.43 for CCL shares, with a high estimate of $38 and a low of $15. That’s a 34% potential return if Carnival Corp hits its median forecast for those investing at around the $14 mark.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only