Will Carnival (CCL) Be A Buy Ahead Of Its Earnings?

Carnival Corp is expected to post a rise in second-quarter revenue on Tuesday, helped by steady demand for cruise vacations and higher itinerary prices. Investors will look out for updates on booking trends for future, impact from fuel and operating costs as well as any forecast the cruise operator provides.

From the technical, CCL is showing a bullish crossover, as the market anticipation of a rise in revenue earnings could be one of the reason.

CCL last reported earnings on 27 March 2024 before the market opened (BMO). CCL shares gained +0.9% the day following the earnings announcement to close at 17.19. Following its earnings release, 88 days ago, CCL stock has drifted -6.5% lower.

From the time it announced earnings, CCL traded in a range between 13.80 and 17.13. The last price (16.07) is closer to the higher end of range.

Implied straddle for upcoming earnings is expected to come in at 8.7%. This might be inline with what CCL have been showing for its past 3 earnings, implied straddle could provide a positive gain for CCL, but I would think it could be in the low percentage of 2-3%.

The options market overestimated CCL stocks earnings move 83% of the time in the last 12 quarters. The predicted move after earnings announcement was ±8.6% on average vs an average of the actual earnings moves of 6.2% (in absolute terms).

CCL's last earnings implied volatility (IV30) going into earnings was 59.5. The last time CCL released earnings, the implied volatility dropped to 41.5, resulting in an implied vol crush of 30%. 5 days after earnings, the 30 day IV was 42.4.

Average Implied Volatility Crush For CCL Earnings: 14%

Average 30 Day Implied Volatility 1 Day Before Earnings: 67.2

Average CCL 30 Day IV for the Day of Earnings: 57.9

Average 30 Day Implied Volatility 5 Days After Earnings: 56.9

Option volatility skew shows the implied volatility of options across different strike prices. CCL has an average implied volatility of 80.10% for options expiring Jun 28, 2024 (5 days).

If we looked at the technical indicators beyond what bullish crossover is expected, we could see that CCL is trading sideway recently, and MACD is indecisive whether it would be making a move towards a bullish crossover.

KDJ on the other hand is showing potential upside move for the J value, which normally indicate that the current price at around $16 could be a potential BUY price.

But I would suggest that we pay attention to the price action on Monday (24 June) trading to have a feel of the traders and investors sentiment.

From the RSI chart, we are not seeing that CCL is gathering interest from traders and investors, tat explain the reason why it has been trading sideway, we would need CCL to show a clear signs of wanting to move towards overbought region.

That way, we could have a potential upside move after its earnings.

Even though technical could provide a bullish crossover, but there are some things that investors should look out for, especially the demand buying interest from the market.

Currently CCL have been trading sideway which does not seem to have gather much market interest, I would suggest that we watch the price action today (24 June) for CCL, before deciding if CCL would be a potential BUY for its earnings.

Appreciate if you could share your thoughts in the comment section whether you think CCL would gather interest from the market today (24 June) before its earnings tomorrow before market open (25 June).

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.