Carnival Corp stock falls on weak guidance; Q1 results top expectations

Shares of Carnival Corporation (CCL) fell sharply in early trading Tuesday after the company lowered its full-year 2019 guidance to reflect the impact of unfavorable exchange rates and high fuel costs.  Meanwhile, first-quarter earnings surpassed analysts’ estimates despite a year-over-year decline. Revenues rose and beat the Street view.

Net profit, excluding one-off items, dropped to $0.49 per share from $0.52 per share in the year-ago quarter but surpassed analysts’ forecast. Reported income was $336 million or $0.48 per share, down from $391 million or $0.54 per share in the comparable period of last year.

Revenues of the cruise line operator moved up 10% annually to $4.67 billion during the quarter and came in above Wall Street estimates. The top-line benefitted from higher capacity and improved onboard spending by clients, which was partially offset by the timing of cost increases, higher fuel price, and unfavorable exchange rates.

The top-line benefitted from higher capacity and improved onboard spending by clients, which was partially offset by higher costs

Arnold Donald, CEO of Carnival Corp. said, “First quarter earnings included revenue growth from higher capacity and improved onboard spending, offset by the timing of cost increases and drag from fuel price and currency compared to the prior year. First quarter adjusted earnings were better than the mid-point of December guidance by $0.07 per share.”

Guidance

Looking ahead, the management currently expects full-year adjusted earnings to be in the range of $4.35 per share to $4.55 per share, which is notably lower than the earlier estimate of $4.50-$4.80 per share. The revised outlook reflects a $0.22 per share impact from high fuel prices and unfavorable currency. Net cruise revenue is estimated to grow 5.5% in fiscal 2019, aided by a 4.6% capacity growth. The estimate for net revenue yields growth is about 1%.

In the second quarter, adjusted earnings are expected to be between $0.56 per share and $0.60, which represents a decrease from the year-ago period. Meanwhile, net revenue yields are seen staying broadly unchanged year-over-year.

Over the past twelve months, Carnival shares lost about 14% and hit a two-year low towards the end of last year. Later, they regained strength and gained 13% since the beginning of 2019. The stock, which closed the last trading session slightly higher, lost about 8% in the early hours of Tuesday’s session following the earnings report.

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