Carnival Profits Way Up, Commissions Way Down

Cruise Week

Carnival Corp's Q1 results saw net income more than double while revenue remained flat. Costs were down in several areas – especially fuel – which helped boost those margins. But cruise sellers won't be happy to note that one of the areas of cost savings came in the commission line.

While fuel prices declined 37%, the 'commissions, transportation and other' category was also down once again, this time by 7.5%. That key commission indicator declined from $520 million in the 2nd quarter of 2014 to $481 million for the same period this year.

Cruise Week speculates that Carnival is working hard to shave costs so that investors will respond with a higher share price. There's a perception that competitors are ringing their clock in terms of stock market share prices.

Heading into this week, Royal Caribbean traded above $80 per share, NCLH traded at $56 and Carnival Corp. traded at $48.6.

But looking at it from another perspective, Carnival Corp. stock has been climbing significantly since last year. Going into Tuesday morning's call, its stock was up double digits from a year ago, including close to 10% since 01JAN. And, prior to the earnings call on Tuesday morning, several analysts further upgraded CCL with Susquehanna upgrading its price target to $56.

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