What happened

Shares of Carnival (CCL -1.70%) were moving higher this week after the company reported its first-quarter earnings on Monday morning.

The stock actually fell initially on the earnings report, as Carnival's guidance for the rest of the year called for a wider loss than expected. However, the company beat top- and-bottom line estimates in the first quarter, and a number of analysts issued bullish notes in response to the report.

After the stock fell 5% on Monday, it gained in each of the subsequent days this week and was up 9.5% as of Thursday at 2 p.m. ET, according to data from S&P Global Market Intelligence.

A cruise ship.

Image source: Getty Images.

So what

Carnival's first-quarter results offered a number of reasons to be hopeful for investors who have patiently been waiting for a recovery from the pandemic.

Revenue in the quarter was $4.43 billion, up from $1.62 billion in the quarter a year ago and better than estimates at $4.33 billion.

More importantly, management said that the revenue was now back to 95% of 2019 levels, indicating the business had nearly recovered to pre-pandemic levels.

The company posted adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) profit of $382 million, but on the bottom line, it had an adjusted per-share loss of $0.55, which compared to the consensus at a loss of $0.60.

CEO Josh Weinstein also touted the strong bookings for the rest of the year, saying the company was "enjoying a phenomenal wave season," the heavily promotional period for the cruise industry in the first calendar year. 

The company achieved its highest-ever quarterly booking volumes in North America and Europe, and Weinstein said the cruise operator was well booked for the remainder of the year at higher prices. 

The stock got two analyst upgrades in the aftermath of the report, and Stifel reiterated its buy rating and price target of $18, calling the stock "overly compelling."

Now what

If there was a weak spot in the report, it would seem to be the company's guidance, as it expects an adjusted loss per share of $0.28 to $0.44 for the year, as it is still trying to narrow the cost gap from 2019. It sees net per diems, one measure of revenue, rising 1% to 2% from 2019, while adjusted cruise costs are expected to increase 6.5% to 7.5%.

Even so, the company is clearly making progress, and investors should be encouraged by strong bookings for the remainder of the year. Carnival stock may finally be looking like a buy.