Will Carnival Corp. Cruise Through Earnings Tuesday?

| About: Carnival Corporation (CCL)

Carnival Corp. (NYSE:CCL) is set to report FQ1 2014 earnings before the market opens on Tuesday, March 25th. Carnival Cruise Lines have had some bad press in recent years including 1 infamous incident where passengers were stuck on a ship with few working toilets for 5 days. Despite some headline grabbing mishaps, Carnival Corp. has managed to outperform Wall Street's earnings expectations in each of the past 6 quarters. This quarter the Estimize community is expecting Carnival to do it again. Here's what investors expect from Carnival on Tuesday.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.image

(Click Here to see Estimates and Interactive Features for Carnival)

The current Wall Street consensus expectation is for Carnival to report -8c EPS and $3.562B revenue, while the current Estimize.com consensus from 16 Buy Side and Independent contributing analysts is -7c EPS and $3.572B in revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Carnival to beat the Wall Street consensus by 1c EPS and $10 million on revenue.

Over the past 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting Carnival 's EPS and revenue 5 and 3 times resepectively. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are only seeing a small difference between the 2 groups' expectations.image

The distribution of estimates published by analysts on the Estimize.com platform range from -12c to -2c EPS and from $3.500B to $3.678B in revenues. This quarter we're seeing a moderate distribution of estimates on Carnival .

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signaling less agreement in the market, which could mean greater volatility post earnings. image

Over the past 4 months the Wall Street EPS consensus rose from -10c to -8c, while the Estimize consensus fell from a high of -5c to -7c. Meanwhile, the Wall Street revenue forecast dropped from $3.575B to $3.562B, while the Estimize forecast declined significantly throughout the quarter from $3.615B to $3.572B. Timeliness is correlated with accuracy and downward analyst revisions at the end of the quarter are often a bearish indicator.image

The analyst with the highest estimate confidence rating this quarter is BradHewitt91, who projects -4c EPS and $3.610B in revenue. In the Winter 2014 season BradHewitt91 is rated as the 20th best analyst and is ranked 13th overall among over 4,000 contributing analysts. This season BradHewitt91 has been more accurate than Wall Street in forecasting EPS and revenue 52% and 51% of the time respectively throughout 128 estimates. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case, BradHewitt91 is making a bullish call expecting Carnival to beat the Estimize community's consensus by a sizable margin.

Although Carnival Cruise Lines has had its share of mishaps over the past few years, the company has consistently beaten Wall Street's expectations. This quarter contributing analysts on the Estimize.com platform are expecting Carnival Corp. to exceed the Street's earnings forecasts on both the top and bottom line.

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