'Vacations are sacrosanct': Carnival stock surges on record quarter, healthy cruise demand

Cruise operator Carnival Corporation ( CCL ) reported record third quarter bookings and customer deposits, demonstrating its ability to navigate rising fuel costs and keep travelers engaged.

The company earned an adjusted $1.43 per share in the third quarter, beating Wall Street analyst estimates of $1.35 per share. Carnival reported revenue of $8.43 billion, above the $8.39 billion expected.

On the company's earnings call, CEO Josh Weinstein called out "broad-based" and "very healthy" demand for cruises, even as consumer sentiment has plunged amid inflation and geopolitical concerns.

"There is a growing change in the mentality of Americans, which is just catching up to Europeans, as we've talked about before, that vacations are sacrosanct," Weinstein said. "And they will take them in good times and in bad. … And so we are an amazing value for people if the consumer confidence isn't great, if there is pressure from things like price of gasoline, if there's other inflation, if there's concerns about filling the blank because that's all we hear about nowadays."

That strength led the company to raise its outlook. For the full year, it now expects normalized net yields of 2.7%, up from its June guidance of 2.25% net yields. Earnings per share for the year are also expected at a higher $2.24 than the $2.22 forecast last quarter.

"2028 is also off to an excellent start, at higher occupancy and even higher prices year over year, and our booking curve is further out than it has ever been at this point in the year," Weinstein said.

Carnival stock sailed 12% higher on Tuesday, making a small dent in the stock's roughly 20% year-to-date loss.

Cruise line stocks have been battered this year as rising fuel costs stemming from the war in the Middle East have added to companies' expenses.

Carnival's Weinstein said the company offset a $150 million impact from higher energy prices in Q3 by using less fuel.

The bullish commentary on travel demand helped boost other cruise stocks. Royal Caribbean ( RCL ) stock rose 6%, while Norwegian Cruise Lines ( NCLH ) stock increased 5%. Airline stocks also got a modest lift.