Carnical Corp.(NYSE:CCL) shares fall after reporting earnings, gives disappointing guidance

NYSE: CCL | Carnival Corporation Common Stock News, Ratings, and Charts

CCL – Shares of Carnival hit took a big hit on Tuesday after the cruise-ship operator lowered its fiscal 2019 earnings guidance.

Shares of Carnival (CCL) hit took a big hit on Tuesday after the cruise-ship operator lowered its fiscal 2019 earnings guidance due to fuel costs and currency headwinds.

The back story. The news came as the company announced its fiscal first-quarter financial results.

During the first quarter, Carnival earned 48 cents a diluted share, compared with 54 cents a year earlier.

In a release, the company’s CEO and president, Arnold Donald, said that first-quarter earnings reflected revenue growth from higher capacity and better onboard spending. But that was offset in part by “a drag from fuel price and currency compared with the prior year,” he said.

A stronger dollar hurts a company like Carnival, which has a lot of overseas business. Other currency movements can hurt as well. For example, the company’s shipbuilding contracts are typically denominated in euros.

On the plus side, the company said that “cumulative advanced bookings for the remainder of 2019 are ahead of the prior year at prices that are in line with the prior year on a comparable basis.”

What’s new. In the current fiscal year, which ends in November, the company said it expects to earn from $4.35 a share to $4.55 on an adjusted basis, down from its December guidance of $4.50 to $4.80.

Looking ahead. Much like hotel operators seeking to add properties, cruise companies have to balance adding new ships with keeping prices firm.

Carnival’s stock, which yields 3.8%, has a one-year return of minus 18%. Concerns about adding too many new ships too quickly have weighed on the sector.

Carnival is by far the largest U.S. cruise operator, with sales of nearly $19 billion in its most recent fiscal year. It operates multiple brands, including Carnival, Seabourn, and the Holland America Line.

In its most recent fiscal year, the company earned $4.44 a diluted share, up from $3.59 the previous year.

Carnival shares are very cheap at these levels, trading at about 11 times current fiscal year earnings estimates, according to FactSet. That’s well below their five-year average of closer to 17 times.

The stock was trading around $52 midday Tuesday, down about 8%.

Carnival Corp. shares were trading at $51.47 per share on Tuesday afternoon, down $5.18 (-9.14%). Year-to-date, CCL has gained 5.30%, versus a 12.66% rise in the benchmark S&P 500 index during the same period.

CCL currently has a POWR Rating of B (Buy), and is ranked #2 of 5 stocks in the Travel – Cruises category.

This article is brought to you courtesy of MarketWatch.

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