Carnival Corporation & plc (CCL) is loitering around breakeven this afternoon following a mixed fiscal first-quarter report, which saw the cruise operator beat EPS expectations but pull back on full-year estimates.

Earlier today, the company reported earnings per share of 33 cents, compared to 30 cents in the previous year. Analysts were only expecting 19 cents. CCL stated that lower revenue yields were offset by lower fuel prices from the previous year, while its focus on cost controls also helped.

Revenues declined by about 9% to $2.9 billion from $3.2 billion.

CCL is certainly feeling the impact of the difficult economic landscape, and is, therefore, focusing on cost controls and a strong liquidity position. Booking volumes for the rest of the year are actually running 10% better than the prior year, but at significantly lower prices.

Due in part to this, CCL pulled back on 2009 EPS to

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As a single economic entity, Carnival Corporation (CCL) & Carnival, Plc (CUK) is the largest cruise operator in the world. Carnival's cruise ships offer various itineraries to passengers worldwide under leading cruise brands.We maintain our Hold rating for Carnival Corporation following the release of Q4 financial results. Given our expectation for continuing margin pressures and potential demand weakness, we do not feel that material price appreciation is warranted at this time.While the recent pullback in the price of fuel should provide some relief, a great deal of uncertainty remains heading into fiscal 2009. The recent dividend suspension has afforded Carnival increased financial flexibility, however. Our six-month target price of $22.50 is based on a multiple of 8.5x expected 2009 earnings.Read the full analyst report on CCLRead the full analyst report on CUK ...

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Royal Caribbean Cruises Ltd. (RCL) shares dropped as much as 13% on the news that the second-biggest cruise operator will suspend its quarterly dividend of 15 cents a share.

With this move, Royal Caribbean aims to enhance its liquidity as the weakening global economy begins to take its toll on the cruise industry. The Miami-based company now expects to save about $125 million each year.

Analysts expected this move as the company's peer, Carnival Corp., had already discontinued its dividend.

RCL is a Zacks #3 Rank ("hold") stock.

"RCL" Free Stock Analysis: Buy? Sell? Hold?Zacks Investment Research

We maintain our Hold rating for Carnival Corporation (CCL) and Carnival Plc (CUK) following the release of Q3 financial results. We expect Carnival to continue to trade at a premium to its largest competitor over the near-term. As a single economic entity, Carnival Corporation & Carnival Plc is the largest cruise operator in the world.

However, given our expectation for continuing margin pressures, especially related to significantly higher fuel expenses, we do not feel that material price appreciation is warranted at this time. While the recent pullback in the price of fuel should provide some relief, we note that costs remain significantly higher on a year-over-year basis.

Carnival has historically traded at a premium to Royal Caribbean (RCL), based on forward price-to-earnings multiples. This relationship still holds, based on current prices and our forward twelve-month EPS estimates for both companies. While Carnival Corporation is trading at 14.0x estimated

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