On Sept. 20, Miami-based cruise ship operator Carnival Cruise Lines (NYSE:CCL) released third-quarter earnings for the period ended Aug. 31.

  • Carnival took delivery of a couple of new ships just in time for the lucrative summer season and filled them to capacity. The results are showing in revenue and earnings growth.
  • If you thought the bottom line looked good, shoot a glance at the cash flow figures. Yes, free cash flow ballooned mostly thanks to lower capital expenditures, but to everything (turn, turn, turn) there is a season (turn, turn, turn).
  • Those steady margins are impressive in the light of 7.4% higher fuel costs over last year.
  • The cruise business is booming, judging by recent results from Carnival, Royal Caribbean (NYSE:RCL), and the big-boat division of Disney (NYSE:DIS).  But you can ride all of their successes with one investment -- check out five-star Motley Fool CAPS stock and Rule Breaker Steiner Leisure (NASDAQ:STNR).

(Figures are in millions, except per-share data.)

Income Statement Highlights

Q3 2007

Q3 2006

Change

Sales

$4,321

$3,905

10.7%

Net Profit

$1,377

$1,232

11.8%

EPS

$1.67

$1.49

12.1%

Diluted Shares

829.0

831.0

(0.2%)

Get back to basics with the income statement.

Margin Checkup

Q3 2007

Q3 2006

Change*

Gross Margin

49.3%

49.4%

(0.1)

Operating Margin

34.5%

34.3%

0.2

Net Margin

31.9%

31.6%

0.3

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q3 2007

Q3 2006

Change

Cash + ST Invest.

$1,753

$615

185.0%

Accounts Rec.

$423

$396

6.8%

Inventory

$297

$278

6.8%

Liabilities

Q3 2007

Q3 2006

Change

Accounts Payable

$468

$498

(6.0%)

Long-Term Debt

$5,735

$6,556

(12.5%)

The balance sheet reflects the company's health.

Cash Flow Highlights

Q3 2007

Q3 2006

Change

Cash From Ops.

$1,122

$943

19.0%

Capital Expenditures

$246

$699

(64.8%)

Free Cash Flow

$876

$244

259.0%

Owner Earnings

$1,410

$788

78.9%

Free cash flow is a Fool's best friend.

Related Foolishness:

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

Disney is a Motley Fool Stock Advisor recommendation and Steiner Leisure a Motley Fool Rule Breakers rebel.

At the time of publication, Fool contributor Anders Bylund was a Disney shareholder but had no other position in any company mentioned. Fool rules are here.