These may be challenging times for the cruise line industry given the plethora of disruptive storms and potential political challenges for travel restrictions, but Carnival Corporation & plc (NYSE:CCL) (NYSE:CUK) is still coasting along with reasonable growth. 

The world's largest cruise ship operator posted results for its fiscal second quarter on Tuesday morning, with revenue climbing 8% during the seasonally potent summertime period to $5.5 billion. An 8% year-over-year uptick may not seem like much, but this is Carnival's strongest growth in six years. Reported earnings declined, but after backing out unrealized gains and losses on fuel derivatives and other net charges (the best way to smooth out performance given that Carnival makes big bets to hedge against the volatility of fuel costs and the one-time $392 million impairment charge related to its decision to realign its business in Australia), adjusted net income rose to $2.29, up nicely from its $1.92-a-share showing a year earlier.   

Carnival's Vista ship on the water with a "Best New Ship of 2016" caption.

Image source: Carnival.

Setting sail into a new quarter

Carnival's doing well: It's gradually growing its fleet, and passengers are paying more for their cabins. Gross revenue yields -- the most popular measuring stick in assessing a cruise line's health; basically the revenue per available lower berth day -- rose 5.5%. On a constant currency basis we'd be eyeing the same 5.1% uptick that Carnival posted during its fiscal second quarter. Carnival's earlier guidance was targeting a 4% increase. Gross cruise costs rose at a stubborn 12.4% clip, but that includes higher costs for fuel and the ship impairment charges. 

Carnival has been on the forefront of digital technology. Earlier this year it started to roll out Ocean, a wearable device for passengers. Guests donning the Ocean medallions and Bluetooth-tethered devices can do things like order drinks, customize their cabin settings, and locate other members of their travel parties.

Expanding in this area, on Monday Carnival announced the launch of OceanView, billed as the world's first over-the-top digital streaming channel from a travel provider. The round-the-clock programming will be available through several leading set-top platforms and directly through It will also initially be available in more than half of its ships. Carnival has partnered with networks in the past to run the travel shows that it has produced, and now it has a way to expand its brand ambassadorship to anywhere in the world with an online connection. Carnival also unveiled its OceanView mobile-gaming portfolio earlier this week, giving it a way to reach out to millennials that aren't typically exposed to cruise ships until later in life. 

There's no denying that devastating Mexican earthquakes and a slate of hurricanes pummeling the Caribbean islands will have a near-term toll. Carnival sees an earnings hit of $0.10 to $0.12 per share for the current quarter as a result of the disruption. However, with advance bookings for the first half of 2018 running ahead of a year earlier and at higher price points, the near-term outlook is still bright. It is also raising the low end of its profit target for the entire fiscal year. Carnival now sees adjusted profit per share of $3.64 to $3.70 in fiscal 2017. We've seen the low end of Carnival's guidance go from $3.30 to $3.50 to $3.60 to the current $3.64 with every passing quarterly update. The challenges are real, and storms continue to threaten Carnival's operations. However, Carnival continues to make the most of its market-leadership position and its fleet of 103 ships.

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