Carnival Corporation

Royal Caribbean is scheduled to report second-quarter results before the market opens on Tuesday, with analysts expecting a 9% decline in adjusted earnings per share. The company's own guidance from three months ago called for adjusted earnings per share of $3.83 to $3.93, while analyst estimates are slightly higher at $3.98 per share. Revenue is projected to rise a modest 6%, but the focus will be on the outlook after rival Carnival's recent top-line miss and weak bottom-line guidance hurt its stock. Royal Caribbean trades at a premium to competitors, and this report is seen as an opportunity to justify that valuation given its history of superior revenue growth and net margins.

Carnival shares have dropped 9.7% since its last earnings report, underperforming the S&P 500. The company reported better-than-expected second-quarter fiscal 2026 results, with adjusted earnings per share of 41 cents beating the Zacks Consensus Estimate of 35 cents and revenues of $6.66 billion surpassing the $6.64 billion consensus. Despite the beat, Carnival lowered its full-year adjusted EBITDA guidance to approximately $7.11 billion from $7.19 billion, while raising its adjusted EPS outlook to $2.22 from $2.21. Customer deposits reached a record $9.0 billion, and 93% of 2026 capacity is already booked. Analysts have since revised estimates downward, and the stock carries a Zacks Rank of 3, or Hold.

Penguin Solutions shares soared 25.1% after the company reported third-quarter fiscal 2026 adjusted earnings of $0.84 per share, surpassing the Zacks Consensus Estimate of $0.63 per share. Enerpac Tool Group shares jumped 6.3% after posting adjusted earnings of $0.60 per share, beating the estimate of $0.49 per share. NVIDIA shares surged 3.7% following news that China may allow its major AI companies to purchase a limited number of H200 chips. Carnival Corporation shares tumbled 3.9% as crude oil prices spiked due to the escalation of the Middle East war.

Energy stocks rose in premarket trading Wednesday as U.S. oil prices surged after President Donald Trump said the ceasefire with Iran is over. Diamondback Energy jumped more than 3%, APA Corporation and Occidental Petroleum rose more than 2.5%, Chevron was up more than 2%, and Exxon Mobil rose 1.5%. In contrast, fuel-exposed companies fell, with Carnival Corporation off 3.5%, Norwegian Cruise Line down 3%, United Airlines falling 3%, and Delta Air Lines declining nearly 2%. SpaceX bucked the sell-off trend, rising just under 0.5% after a more than 6.5% decline on Tuesday that pushed the stock below its IPO first-trade price of $150. Memory stocks continued their sell-off, with Sandisk off more than 5.5%, Western Digital down 5%, Micron Technology declining 4.5%, and Seagate Technology lower by 3.5%. Bath & Body Works fell more than 4% after Goldman Sachs downgraded the stock to sell from neutral, citing potential cannibalization from third-party distribution. Estee Lauder declined 2% after disclosing estimated restructuring costs now total $1.75 billion, up from a previous estimate of $1.55 billion. Rivian Automotive was off nearly 4% following an 18% drop on Tuesday after announcing a public offering of 75 million shares.

StockStory identified two cash-producing stocks with exciting potential and one facing headwinds. SentinelOne, with a trailing 12-month free cash flow margin of 3.5%, is noted for its 22.8% annual recurring revenue growth and estimated 19.4% revenue growth over the next 12 months. NetApp, with a 27% free cash flow margin, has seen billings growth averaging 7.3% over two years and annual earnings per share growth of 15% driven by share buybacks. Carnival, with an 11.7% free cash flow margin, is flagged as risky due to disappointing passenger cruise days indicating weak demand and a low return on invested capital of 1.4%.

Carnival Corporation shares have risen 11.2% over the past three months, yet the stock has underperformed both its industry and the S&P 500, which gained 13.9% and 14.4% respectively. The cruise operator reported record second-quarter fiscal 2026 revenues, EBITDA, net income, and customer deposits that reached an all-time high of $9 billion, while management exceeded its own guidance by roughly $100 million. However, geopolitical uncertainty and softer European demand forced the company to reduce its full-year normalized yield growth outlook by approximately 1 percentage point, and the Zacks Consensus Estimate for fiscal 2026 earnings per share has trended downward over the past 30 days. Carnival trades at a discount to industry peers on a forward 12-month price-to-earnings basis, and the stock currently carries a Zacks Rank #3, or Hold.

Royal Caribbean is expanding its private-destination portfolio to support multi-year yield growth through differentiated vacation experiences. The company recently opened Royal Beach Club Santorini, following the launch of Royal Beach Club Paradise Island, and strong demand underscores the value of proprietary destinations. The next phase includes Royal Beach Club Cozumel expected in early 2028, and Perfect Day Mexico and Costa Maya expected in late 2027 and ramping in early 2028, which are projected to further differentiate itineraries and contribute to yield growth. Perfect Day Mexico also provides a larger opportunity in the Gulf and Texas markets, where Royal Caribbean sees room to build demand relative to Florida. The strategy faces increasing competition, as Carnival is leveraging scale and destination density with assets like Celebration Key and its Paradise Collection, while Norwegian is upgrading Great Stirrup Cay with a new waterpark to support demand and yield improvement.

Carnival's analyst fair value estimate has been revised down from US$37.70 to US$35.60, a decline of about 5.6%, as analysts weigh better cost execution and fuel savings against softer yield guidance and patchy European demand. Forecast revenue growth was adjusted from 4.19% to 3.76%, while the projected net profit margin was revised from 14.59% to 13.13%. The assumed future P/E multiple was updated from 16.9x to 18.5x, and the discount rate moved from 10.37% to 10.19%. Bullish analysts, including Tigress Financial, TD Cowen, Citi, Stifel, Melius Research, Argus and Wells Fargo, have raised price targets, citing an increasingly fuel-efficient fleet and strong cruise demand. Bearish voices such as Bernstein, Wells Fargo and Barclays point to weaker booking trends in Europe and the Mediterranean, with geopolitical issues in the Middle East weighing on pricing and yields.

StockStory identified three large-cap stocks facing near-term headwinds. Disney, with a market cap of $174.2 billion, showed annual revenue growth of 10.8% over five years, a free cash flow margin of 9.4%, and a return on invested capital of 7.3%. Carnival, valued at $38.9 billion, experienced sluggish passenger cruise day trends and below-average returns on capital, though its free cash flow margin is forecast to improve by 1.6 percentage points. CSX, at an $88.01 billion market cap, reported flat unit sales, a 3.4% annual drop in earnings per share, and a 15.3 percentage point decline in free cash flow margin over five years.

Carnival stock fell 6% to $28.41 after the cruise operator issued weaker-than-expected forward guidance, overshadowing its record quarterly revenue of $6.7 billion and an adjusted earnings per share beat of $0.41. The decline stood in contrast to peers Royal Caribbean, which slipped 1% to $306, and Norwegian Cruise Line, which edged up half a percentage point to $20.14. Royal Caribbean reported net income of $950 million and adjusted earnings per share of $3.60, while Norwegian posted $2.33 billion in revenue with 10% year-over-year growth but lowered its full-year EBITDA guidance. The divergent market reactions highlight how guidance and cost pressures are shaping near-term sentiment across the cruise sector.

Micron Technology dropped more than 10% in midday trading, leading a broad tech selloff that also saw Marvell Technology shed 8% and Sandisk lose 11%. IBM rose more than 4% after JPMorgan upgraded the stock to overweight, citing software-driven recurring revenue and margin improvements, and received an additional boost from President Trump's executive order to accelerate quantum computing. Edgewell Personal Care jumped more than 14% after Bloomberg reported the company rejected an unsolicited $30-per-share takeover offer from Yellow Wood Partners as too low. Carnival fell 6% on weaker-than-expected third-quarter guidance, while AMC Entertainment tumbled 25% after announcing a $200 million share sale. SpaceX shares rose almost 6%, recovering after briefly falling below their $150 debut price.

Carnival Corp shares fell almost 6% on Tuesday after the cruise operator issued a third quarter profit outlook below Wall Street expectations, overshadowing stronger-than-expected second-quarter results and record revenue. The company reported adjusted earnings of $0.41 per share for the quarter ended May 31, ahead of analysts' estimates of $0.33 per share, while revenue rose to a record $6.7 billion, slightly above the consensus forecast of $6.68 billion. Net income attributable to Carnival reached $537 million, and adjusted net income climbed more than 20% year over year to a record $569 million, with adjusted EBITDA also hitting a record $1.6 billion. For the third quarter, Carnival expects adjusted earnings of $1.35 per share, below analysts' expectations of $1.42, and projected full-year 2026 adjusted earnings of $2.22 per share, also below the consensus $2.23. CEO Josh Weinstein noted that booking trends for Mediterranean itineraries were affected by the prolonged conflict in the Middle East, prompting the company to prioritize pricing over occupancy, though recent trends indicate a reversal of these headwinds.

JPMorgan upgraded IBM to overweight from neutral, sending shares up 4% even as large-cap tech sold off. Analyst Brian Essex highlighted that software now drives roughly 45% of revenue but about two-thirds of consolidated profit, making it the primary engine for the stock, and set a December 2027 price target of $291. Separately, Carnival shares fell after the cruise line issued a third-quarter earnings forecast of about 35 cents per share, well below the 42 cents analysts expected, despite beating estimates last quarter. AMC also declined after the company announced a sale of about 95 million common shares to raise around $200 million, diluting existing shareholders and adding to the pressure on the former meme stock, which now trades near $2 per share.

Texas Attorney General Ken Paxton is opening an investigation into Carnival Corporation over an April data breach that compromised the personal data of more than 6 million people. The Civil Investigative Demand will determine if Carnival adequately safeguarded the personal information of the 800,000 Texans impacted by the breach and whether the company maintained reasonable procedures to protect this sensitive information as required by Texas law. In mid-April, Carnival’s information technology security team identified a breach in which an employee account was compromised, exposing names, contact information, dates of birth, payment information, passport and driver’s license information, and health information. Carnival officially reported the event on May 27 and began sending notifications to impacted passengers offering two free years of credit monitoring.

Royal Caribbean Cruises expects higher fuel prices to reduce adjusted earnings per share by 62 cents for the remainder of 2026, with lower earnings from TUI Cruises adding another 12-cent drag. Full-year fuel expense is projected at approximately $1.35 billion, with about 59% of remaining 2026 fuel consumption hedged at rates meaningfully below market levels. The company expects net cruise costs excluding fuel to be approximately flat for the full year, or 50 basis points better than prior guidance, supported by efficiency improvements and expense management. For 2026, Royal Caribbean expects adjusted EPS of $17.10 to $17.50. Competitors Carnival and Norwegian Cruise Line are also facing fuel-related earnings pressure, with Carnival guiding for a 38-cent EPS headwind and Norwegian reducing its full-year adjusted EBITDA and EPS guidance.