Carnival Corp expands fleet with three new LNG ships By Investing.com

MIAMI – Carnival (NYSE:) Corporation, the world’s largest cruise operator, has announced the expansion of its fleet with an order for three new liquefied (LNG)-powered ships, scheduled for delivery in the summers of 2029, 2031, and 2033. This move is set to bolster the company’s Carnival Cruise Line brand, which has seen robust consumer demand for cruise vacations.

The agreement with Italian shipbuilder Fincantieri will see the construction of the new class of vessels, each boasting nearly 230,000 gross registered tonnes. Once delivered, these ships will take Carnival’s LNG-powered fleet to a total of 16 vessels.

Christine Duffy, president of Carnival Cruise Line, emphasized the company’s commitment to innovation and the creation of exciting guest experiences for the future. With more than 3,000 guest staterooms, the new ships will be the largest in the Carnival Corporation global fleet, capable of carrying nearly 8,000 guests at full capacity.

The addition of these ships is part of Carnival’s strategy to optimize the composition of its global brand portfolio and increase guest capacity. This strategy includes transferring a total of five vessels from sister brands to the Carnival Cruise Line fleet between 2023 and March 2025.

Carnival Corporation’s CEO, Josh Weinstein, stated that the company is focusing on growth for its highest-returning brand, Carnival Cruise Line, to meet the strong market demand. The newbuild pipeline, according to Weinstein, reflects a disciplined approach to growth, with an average capacity increase of approximately 1.5% per year between 2025 and 2033.

The new ships will not only be the largest in the fleet but will also incorporate advanced energy efficiency, waste management, and emission reduction technologies. These features align with Carnival Corporation’s commitment to reducing its environmental footprint and achieving immediate greenhouse gas emission reductions.

Pierroberto Folgiero, CEO of Fincantieri, expressed pride in the partnership and the significance of building the largest cruise ship ever constructed by the shipbuilder and in Italy.

Design details and itinerary information for the new ships will be released in the future. The order is contingent upon financing, expected to be completed later this year. This expansion is based on a press release statement from Carnival Corporation.

In other recent news, Carnival Corporation has been making significant strides in the cruise industry. The company recently reported record Q2 earnings, surpassing its guidance with a $170 million bottom-line outperformance, driven by a 12% increase in yields. This led to record revenues, operating income, and all-time highs in customer deposits and booking levels.

Truist Securities, Argus Research, and Macquarie have all maintained their positive ratings on Carnival Corporation and increased their price targets, reflecting confidence in the company’s robust demand and extended booking curve.

The company is also in the process of strategic brand consolidation, with plans to sunset P&O Cruises Australia and integrate it into Carnival Cruise Line. In addition, Carnival Corporation is developing a new destination, Celebration Key, expected to launch in 2025, which is anticipated to contribute to revenue and fuel efficiency. The company is actively working towards its 2026 SEA Change sustainability targets and reducing debt and interest expenses to strengthen its capital structure.

These are recent developments indicating Carnival Corporation’s continued growth and improved returns. The company’s outlook remains positive, with an 8% yield guidance for Q3 and improved full-year net income guidance by $275 million due to increased yields and cost savings.

InvestingPro Insights

As Carnival Corporation gears up for its ambitious fleet expansion, recent data from InvestingPro provides a snapshot of the company’s financial health and market position. With a solid market capitalization of $24.34 billion, Carnival stands as a significant player in the Hotels, Restaurants & Leisure industry.

InvestingPro Tips highlight that Carnival’s net income is expected to grow this year, a promising sign for investors looking at the company’s future profitability. Additionally, 14 analysts have revised their earnings upwards for the upcoming period, suggesting a positive outlook on the company’s financial performance.

From a valuation standpoint, Carnival is trading at a low P/E ratio relative to near-term earnings growth, with a current P/E ratio of 23.54 and an adjusted P/E ratio for the last twelve months as of Q2 2024 at 22.46. This could indicate that the stock is undervalued considering its growth potential.

InvestingPro Data also shows a robust revenue growth of 34.02% for the last twelve months as of Q2 2024, reflecting the company’s successful efforts to increase its guest capacity and optimize its brand portfolio. Gross profit margins stand at an impressive 51.17%, indicating efficient operations and strong profitability.

For those interested in exploring further, InvestingPro offers a total of 11 additional tips for Carnival Corporation, which can be accessed at https://www.investing.com/pro/CCL. Use the coupon code PRONEWS24 to receive up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing you with valuable insights to inform your investment decisions.

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