Carnival Corp (CCL  ) will report its first-quarter earnings on Wednesday, March 27, and while the company hasn't yet fully recovered from the effects of the COVID-19 pandemic, like its sector rivals, Carnival is seeing strong growth in demand.

Carnival stock navigated extremely rough waters in the past four years, but revenues are rising and losses are easing.

The company said in its 2023 annual report that full-year revenues hit a record $21.6 billion and that it entered 2024 with its "best-booked position on record" for both price and occupancy.

However, the company is still struggling for profitability as its costs have risen and it repays the large debt pile accumulated during the pandemic. While operating profit rose significantly to $1.91 billion, it recorded a net loss of $74 million - although this was massively reduced from the net loss of $6 billion from the year before.

When Carnival reports its December-February quarter earnings on Wednesday, the company is expected to post $5.4 billion in revenues, up 22% from the same quarter last year, and a loss of $0.17 per share, an improvement of 69%.

Royal Caribbean, Norwegian Cruise Line Results Impress

Rival Royal Caribbean Group Ltd. (RCL  ) recovered strongly since the pandemic. After reporting last month annual revenues of $13.9 billion and net income of $1.7 billion for its full year the company said "2023 was an exceptional year" and added it expected record earnings in 2024.

Just a couple of days later Norwegian Cruise Line Holdings Ltd (NCLH  ) was also upbeat about its 2024 prospects after reporting forecast beat fourth-quarter revenues.

Shares in Carnival are down about 1% in 2024, but have risen 16% over the past four weeks. Royal Caribbean shares are up 5.5% on the year, and up nearly 19% in the past four weeks since it raised its 2024 outlook. Norwegian Cruise Line is up fractionally on the year, but has soared nearly 30% since its Q4 results and outlook.

Analyst Update

"With Royal Caribbean raising its full-year 2024 outlook in late February, the bar is set high for Carnival," said Christopher Stathoulopoulos, analyst at Susquehanna Financial Group.

He added: "Ahead of Carnival's first-quarter results this Wednesday, we are updating our estimates for FY24 & FY25, with our FY24 estimates for earnings reflecting the impact of the rerouting and cancellation of certain itineraries around the Red Sea," estimated at $0.075 in adjusted earnings per share, or $95 million adjusted net income, "and what we believe will be outperformance in unit revenue."

While cruise operators have enjoyed a resurgence in recent months, the exchange-traded fund that tracks them, as well as hotels and airlines, failed to fully take off as troubles with Boeing Co (BA  ) jets have hampered the performance of airline stocks. Indeed, Southwest Airlines Company (LUV  ) is the worst-performing stock on the S&P 500 over the past month, down 17%.

The Defiance Hotel, Airline, and Cruise ETF (CRUZ  ) gained 3.7% during 2024.