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Summary

  • Despite some headlining-grabbing mishaps, Carnival has managed to outperform Wall Street's earnings expectations in each of the past six quarters.
  • The current Wall Street consensus expectation is for Carnival to report 2 cents EPS and $3.594B revenue.
  • The current Estimize.com consensus from Buy Side and Independent contributing analysts is 4 cents EPS and $3.595B in revenue.

Carnival Corp. (NYSE:CCL) is set to report FQ2 2014 earnings before the market opens on Tuesday, June 24th. Carnival Cruise Lines have had some bad press in recent years including one infamous incident where passengers were stuck on a ship with few working toilets for five days. Despite some headlining-grabbing mishaps, Carnival has managed to outperform Wall Street's earnings expectations in each of the past six quarters. Here's what investors are expecting 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.

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

The current Wall Street consensus expectation is for Carnival to report 2 cents EPS and $3.594B revenue while the current Estimize.com consensus from Buy Side and Independent contributing analysts is 4 cents EPS and $3.595B in revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Carnival to report in-line with Wall Street's revenue consensus while reporting earnings 2 cents higher per share.

Over the previous 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, respectively. 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.

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. Here we are seeing a smaller than usual differential between the two groups' expectations.

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The distribution of earnings estimates published by analysts on the Estimize.com platform range from 1 cent to 6 cents per share and from $3.500B to $3.637B in revenues. This quarter we're seeing a relatively large range of estimates on Carnival earnings compared to previous quarters.

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 wide range of earnings estimates signals less agreement in the market, which could mean greater volatility post earnings.

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Over the past three months the Wall Street consensus fell from 6 cents to 2 cents while the Estimize consensus inched higher from 3 cents to 4 cents. Meanwhile the Wall Street revenue forecast increased from $3.567B to $3.594B while the Estimize sales consensus dropped from $3.602B to $3.595B. Timeliness is correlated with accuracy and the directionality of analyst revisions at the end of the quarter is often a leading indicator. In this case revisions were mostly flat going into the report.

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The analyst with the highest estimate confidence rating this quarter is turbinecity who projects 4 cents EPS and $3.609B in revenue. turbinecity was our Winter 2014 season winner and is ranked second overall among more than 4,500 contributing analysts. This season turbinecity has been more accurate than Wall Street in forecasting EPS and revenue 60% and 51% of the time, respectively, throughout a massive 1,169 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 turbinecity is expecting Carnival to report in-line with the Estimize EPS consensus while beating expectations on sales.

This quarter the Estimize community is expecting Carnival Cruise Lines to report roughly in-line with Wall Street on revenue while beating profit expectations by 2 cents per share. Carnival has a great track record in the recent history of beating the Wall Street consensus and contributing analysts on Estimize.com are expecting the cruise company to beat the Street's forecast by a thin margin again on Tuesday.

Disclosure: None.

Source: What The Buy Side Expects From Carnival Cruise Line On Tuesday