The stock market was mixed on Friday, as investors have had trouble gaining traction even when good news comes out. For instance, today's reading on inflation suggested that price pressures seem under control. Yet gains in major market indexes petered out somewhat by midday.
The travel industry has done quite well lately, benefiting from pent-up demand from consumers who were stuck at home during the early years of the COVID-19 pandemic. However, even as cruise trips and ski vacations have rebounded, shares of Carnival (CCL -0.66%) and Vail Resorts (MTN -0.35%) lost ground on Friday. Here's why.
Carnival can't rise despite all-time record sales
Shares of Carnival gave up early gains and fell 5% at midday on Friday. The cruise line giant reported fiscal third-quarter financial results for the period ended Aug. 31, but investors weren't entirely pleased with its projections for the rest of the year.
Carnival's numbers looked much better than they were last year. Revenue of $6.85 billion was up 59% year over year, with both passenger ticket sales and onboard revenue soaring from year-ago levels. Carnival reversed a year-ago loss with net income of $1.07 billion, and that worked out to $0.79 per share.
Moreover, Carnival gave some encouraging signs for the future. Booking volumes during the quarter and into the month of September remained at levels that were much higher than normal. In total, Carnival sees 2024 as looking extremely promising, given advance booking positions that are far above the high end of historical ranges. Customer deposits also reached record levels, and fuel consumption has proven to be much more favorable than Carnival had anticipated.
Yet some investors are still worried about high debt levels and whether the cruise line operator can fully bounce back from the pandemic. Carnival has paid down $4 billion in debt since the first quarter of 2023, but that still leaves a long way for the cruise giant to go in order to declare victory once and for all.
Vail falls coming into ski season
Elsewhere, shares of Vail Resorts dropped more than 6%. The ski resort giant's fiscal fourth-quarter financial report for the period ended July 31 isn't particularly meaningful because of its off-season timing, but Vail's outlook for fiscal 2024 seemed to raise some eyebrows among investors.
Vail closed its fiscal year on a quiet note. Revenue of $270 million was up about 1% year over year, while losses attributable to the company jumped to $129 million, or $3.35 per share. That's not unusual, given that the bulk of Vail's assets are in the Northern Hemisphere, which has summer during its fiscal fourth quarter. For the full year, revenue was sharply higher, but rising expenses sent net income downward. Vail earned $268 million in fiscal 2023, or $6.74 per share, down from $8.55 per share in fiscal 2022.
Season pass sales for the 2023-2024 season look reasonably strong, with unit sales up 7% and dollar-based revenue up 11% as of Sept. 23. CEO Kirsten Lynch said that Vail expects between $316 million and $394 million in net income in fiscal 2024, with "meaningful growth" in revenue and profits coming in particular from better margins in the resort segment.
Yet investors had hoped that Vail would carry more momentum into the coming year, and that's part of what might be bringing the stock lower. Moreover, shareholders will have to wait another few months before the snow really starts to fall for Vail. That level of patience is tough for Wall Street to maintain right now.
