Carnival Might Reinstate its Dividend in March 2010

William Blair & Company reiterated its “outperform” rating for Carnival Corporation (NYSE: CCL).

At its analyst day, CCL summarized a long-term strategy aimed at rebuilding its returns on investment to the historical levels of 10%-11%. As per CCL’s strategy, the company will expand by just two to three new ships every year after 2011. According to William Blair & Company, CCL continues to improve its yield management techniques and marketing strategies for driving customers to its site. With CCL’s operating cash flows likely to rise significantly as compared to the cash outflows in 2011, William Blair & Company expects the company to reinstate its dividend from March 2010.

Carnival indicated that the recovery is underway, with yields anticipated to be flat to modestly positive in the first quarter of 2010. William Blair & Company expects CCL’s earnings per share for the November quarter to beat its guidance of $0.16-$0.20. Moreover, CCL’s earnings are likely to be flat in 2010, indicating a possibility of a slip in meeting the consensus expectations, William Blair & Company added. CLL’s earnings might recover substantially in 2011, with the company achieving 21% EPS growth in the year, William Blair & Company added.