Shares of Carnival (CCL +0.21%) were moving higher last month as the world's largest cruise line benefited from expectations that the Federal Reserve would lower interest rates in 2024. The company posted strong results in its fourth-quarter earnings report toward the end of the month.
According to data from S&P Global Market Intelligence, the stock finished the month up 23%. As the chart below shows, Carnival notched much of its gains at the beginning of the month, though the stock also jumped on Dec. 21 after its earnings report came out.
The Carnival comeback continues
Carnival stock surged to kick off December after dovish comments from Fed Chair Jerome Powell helped push the stock higher.
Since Carnival competes in a highly discretionary industry and carries a large debt balance, the stock is particularly sensitive to interest rates. On Dec. 1, Powell said that the Fed Funds rate was "well into restrictive territory," a sign that rates could start to come down soon.
Carnival stock gained 5% that day and added another 4% in the following session. The stock continued to climb later that week as the company announced strong bookings over the Black Friday shopping weekend on lines including Cunard and Holland America. It also said it achieved a food waste milestone of 38% per passenger compared to 2019, a sign that it's successfully cutting costs and reaching its environmental goals.
The following week the travel stock climbed again as the Federal Reserve projected three interest rate cuts in 2024, and shares jumped 6% on Dec. 21 after the cruise operator impressed the market with its fourth-quarter results.
The company beat estimates on the top and bottom lines. Revenue rose 41% to $5.4 billion in the quarter, topping expectations of $5.31 billion. Carnival reported an adjusted loss per share of $0.07, which compared to a per-share loss of $0.85 in the year-ago quarter and estimates of a loss of $0.13. Carnival also finished the year breaking even on the bottom line, showing it's come a long way from the depths of the pandemic.
Image source: Getty Images.
What to expect for Carnival stock in 2024
Looking ahead to the new year, Carnival said it's entering 2024 with its best-booked position on record in terms of both price and occupancy. It also continues to improve its liquidity and pay down debt, reducing its debt balance by $4.6 billion in the first quarter. It should continue to do that in 2024, which will help boost its profitability by reducing its interest expense.
If interest rates fall as expected in 2024 and travel demand remains strong, Carnival looks set to deliver another winning year.
