Cruise line Carnival Corp. (NYSE:CCL) sailed its way to an impressive fourth quarter profit, as cruise bookings picked up. The company also reported improved full-year earnings as the economy began to recover. The signs point to better times in the industry, as the important January booking season gets underway.

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Smoother Waters
Carnival, whose CEO Micky Arison is perhaps more famously the owner of the NBA's Miami Heat, stated that despite the voyage interruptions and fuel costs, bookings have been slowly improving throughout the year. For the fourth quarter, Carnival pulled in $248 million in profit compared to $193 million in the previous year's quarter.The net cruise costs per available lower berth day (ALBD), a measure of costs without fuel or trip disruptions, came in at 1.1% lower than the same quarter last year. Fuel costs increased 6% year-over-year in the quarter and were up sequentially from the previous quarter. EPS was 31 cents versus 24 cents in Q4 2009, while voyage disruptions lowered earnings by 7 cents per share this quarter. Revenue increased to $3.5 billion from $3.3 billion in the fourth quarter last year.

Hints of Leisure Return
With the gradual improvement over the year in cruise bookings, Carnival's full year earnings also improved. Net income was $2 billion or $2.47 per share, compared to $2.24 per share or $1.8 billion in 2009. Full year revenue rose to $14.5 billion from $13.5 billion.The company increased its cash from operations to $3.8 billion, a 14% gain from last year, and restored a quarterly dividend of 10 cents. Carnival's earnings point to a resurgent cruise industry.

Royal Caribbean Cruise Ltd (NYSE:RCL), Carnival's main competitor, is still formidable, and added two new ships which can hold upwards of 5,000 passengers each. Carnival added its 2,000 plus passenger Queen Elizabeth ship for the Cunard line, one of six new ships it delivered in 2010. Bookings are expected to be strong for Carnival in 2011, as the company forecasts full year earnings for 2011 at $2.90 to $3.10 per share, with cash from operations totalling more than $4 billion.

Other Leisure
Casino stocks, representing another travel and leisure destination business, have done well this year, so much so that two of the bigger players, Las Vegas Sands (NYSE:LVS) and Wynn Resorts (Nasdaq:WYNN), already trade at very high valuations.The casino trade picked up earlier and faster than the cruise business so investors were quick to jump on this and send the stocks up.

The travel and leisure rebound is broad based. Hotel chains Hyatt Hotels (NYSE:H), Starwood Hotels and Resorts Worldwide (NYSE:HOT) and Marriott International (NYSE:MAR) all are expanding into emerging markets. (To learn more, see What Is An Emerging Market Economy?)

The Bottom Line
The stock market has been ahead on the rebound of the travel and leisure stocks, including Carnival, so investors aren't going to be able to get a bargain on Carnival now. With both the cruise line and other travel and leisure names doing well and on course to keep going, investors will just have to be patient for a better opportunity to buy the stock.

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