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Carnival Cruises Past Consensus

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But might there be some trouble brewing on the high seas?

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On Thursday Carnival Corp (CCL) disseminated its third quarter earnings. In the period ended August 31st the Florida based company reported a profit of $1.33 billion or $1.65 a share. That was down a smidge from the roughly $1.38 billion or $1.67 a share it turned in during the comparable period last year.

The good news however was that the EPS number was north of the $1.58 a share the Street had reportedly been expecting.

There were some other good points in the release that I thought worth noting as well. For example it offered up guidance for Q4, calling for EPS "in the range of $0.36 to $0.38." That is decent news because the Street had reportedly been looking for 37 cents.

Minyanville's Why Wall Street Will Never Be the SameAlso, it's worth nothing that in the release it said it, "forecasts full year 2008 earnings per share to be in the range of $2.79 to $2.81." That's good news because as the company also readily points out that is, "at the high end of its previous guidance range of $2.70 to $2.80."

Of course not all is a bed of roses.

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There were some concerns I had as well. For example, the company's chief executive offered up that: "bookings have slowed compared to the strong booking levels of a year ago." Of course its pricing is pretty strong so that's a positive. But is this a harbinger of things to come?

Also I noticed that food costs were up about 15.5%. That's not the end of the world but it is interesting and perhaps a concern given that revenue was up "just" 11.4%.

The big wild card in the equation seems to be fuel prices. Per the release, "Higher fuel prices however cost the company $230 million, or $0.28 per share for the third quarter compared to the same quarter a year ago." But going forward, who knows what's going to happen?

For what it's worth however, my gut tells me that the outlook on that front may become a bit more favorable if oil prices keep dropping as they have been, particularly over the last several weeks.

In short, weighing the positives and the negatives of the Q3 release I can't help but think that Carnival Cruise Lines is a good longer-term play. Sweetening the deal for me just a wee bit is the dividend. The current yield is listed at 3.9%.

Carnival closed at $39.23, up 30 cents or 0.77%.

No positions in stocks mentioned.

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