Carnival Corp Shows Recovery Amid Market Turbulence
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jul 10 2024
0mins
Should l Buy CCL?
Source: Coinmarketcap
Carnival Corp's stock price fell by 5.70% as it crossed below the 5-day SMA, reflecting broader market weakness with the Nasdaq-100 down 1.49% and S&P 500 down 1.21%.
The decline comes despite Carnival's recent achievements, including reducing pandemic-related debt and attaining an investment-grade credit rating. The company reported record revenues and increasing future cruise bookings, indicating strong market demand for its services. This suggests that the stock's performance is being impacted by sector rotation rather than company-specific issues.
Investors may find Carnival's long-term growth potential appealing, especially as the cruise industry continues to recover. The company's efforts to enhance its financial stability and capitalize on market demand could position it well for future growth.
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Analyst Views on CCL
Wall Street analysts forecast CCL stock price to rise
18 Analyst Rating
14 Buy
4 Hold
0 Sell
Strong Buy
Current: 23.960
Low
33.00
Averages
37.41
High
45.00
Current: 23.960
Low
33.00
Averages
37.41
High
45.00
About CCL
Carnival Corporation is a global cruise and leisure travel company. The Company has a portfolio of cruise lines, including AIDA Cruises, Carnival Cruise Line, Costa Cruises, Cunard, Holland America Line, P&O Cruises (Australia), P&O Cruises (UK), Princess Cruises, and Seabourn. The Company's segment includes NAA cruise operations, Europe cruise operations (Europe), Cruise Support and Tour and Other. Its Cruise Support segment includes its portfolio of port destinations and exclusive islands as well as other services, all of which are operated for the benefit of its cruise brands. In addition to its cruise operations, it owns Holland America Princess Alaska Tours, a tour company in Alaska and the Canadian Yukon, which complements its Alaska cruise operations. Its Tour and Other segment represents the hotel and transportation operations of Holland America Princess Alaska Tours and other operations. Its tour company owns and operates hotels, lodges, glass-domed railcars and motorcoaches.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Fuel Price Volatility Risk: Carnival's stock is trading at a discount due to volatility in fuel prices linked to the Iran war, with analysts noting the company's unhedged exposure to fuel risks, leading to a 23.3% decline since the conflict began.
- Earnings Uncertainty: HSBC analysts acknowledge greater near-term earnings uncertainty for Carnival compared to peers like Royal Caribbean (RCL), which benefit from derivative protection, yet Carnival trades at around 10 times forward earnings, significantly below the two-year average of 12.4.
- Demand Resilience: Despite operational challenges posed by the Middle East conflict, Carnival is expected to weather these issues due to its strong value proposition and flexibility in responding to demand shifts, with the market underestimating the resilience of experience-led demand, as approximately 85% of 2026 bookings are already secured at healthy pricing.
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- Profit Guidance Cut: Despite improvements in net yields and earnings per share, Carnival lowered its full-year adjusted EPS guidance from $2.48 to $2.21 due to rising fuel costs, anticipating a $0.38 headwind from oil price spikes.
- Debt Management Progress: The company continues to reduce its debt post-pandemic, with interest expenses decreasing from $377 million to $291 million, indicating a positive trend in financial health despite rising overall costs.
- Long-Term Growth Targets: Carnival unveiled its new PROPEL program, aiming for a 2.75 net debt/adjusted EBITDA ratio by 2029, planning to refurbish its fleet and destinations, reflecting confidence in future growth prospects.
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- Profit Improvement: GAAP operating income rose from $543 million to $607 million, while adjusted earnings per share increased from $0.13 to $0.20, exceeding the consensus estimate of $0.18, reflecting the company's strong recovery post-pandemic.
- Debt Management Progress: The company successfully reduced its interest expense from $377 million to $291 million, demonstrating ongoing efforts to pay down the substantial debt incurred during the pandemic, thereby enhancing financial stability.
- Cautious Outlook: Despite management's expectation for a 2.75% increase in net yields for the year, the adjusted earnings per share guidance was lowered from $2.48 to $2.21 due to rising oil prices, highlighting the potential impact of external uncertainties on profitability.
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Earnings and Revenue Performance: Carnival Corp reported better-than-expected first-quarter revenue of $6.17 billion, surpassing estimates, and earnings per share of $0.19, which also exceeded consensus estimates.
Impact of Oil Prices: The company has adjusted its full-year profit outlook for 2026 down to $3.07 billion due to rising fuel prices, which are expected to pressure margins, with Brent crude futures surging over 50% since late February.
Positive Booking Trends: Despite challenges, bookings for 2026 have doubled, positioning the company well for the remainder of the year, with nearly 85% of the year's bookings already secured at historically high prices.
See More
Latest Wall Street Rating Updates
- UBS Upgrade: UBS upgrades Adecoagro from Neutral to Buy, raising the price target from $8 to $16.2, indicating the company is poised to benefit from the ongoing Middle East conflict, which is expected to enhance its financial performance.
- HSBC Bullish on Carnival: HSBC upgrades Carnival from Hold to Buy, asserting that the current share price undervalues the resilience of experience-led demand, which is likely to improve the company's market performance in the near future.
- Morgan Stanley Reiterates Meta: Morgan Stanley lowers its price target for Meta from $825 to $775 but maintains it as a top investment idea, suggesting that market sentiment has bottomed out, making it an opportune time to buy.
- Deutsche Bank Upgrades Colgate: Deutsche Bank upgrades Colgate-Palmolive from Hold to Buy, highlighting the company's core business as having long-term investment value and the ability to weather current market volatility effectively.
See More
HSBC Upgrades Carnival Stock to Buy Amid Fuel Price Volatility
- Rating Upgrade: HSBC upgraded Carnival's stock from hold to buy, trimming its price target from $33.60 to $30.10, which still implies about a 24% upside from Friday's close, indicating long-term confidence in the stock.
- Fuel Price Volatility Risk: Carnival's stock is trading at a discount due to volatility in fuel prices linked to the Iran war, with analysts noting the company's unhedged exposure to fuel risks, leading to a 23.3% decline since the conflict began.
- Earnings Uncertainty: HSBC analysts acknowledge greater near-term earnings uncertainty for Carnival compared to peers like Royal Caribbean (RCL), which benefit from derivative protection, yet Carnival trades at around 10 times forward earnings, significantly below the two-year average of 12.4.
- Demand Resilience: Despite operational challenges posed by the Middle East conflict, Carnival is expected to weather these issues due to its strong value proposition and flexibility in responding to demand shifts, with the market underestimating the resilience of experience-led demand, as approximately 85% of 2026 bookings are already secured at healthy pricing.
See More
Carnival Cuts Full-Year Profit Forecast Despite Beating Estimates
- Earnings Beat: Carnival reported first-quarter revenue of $6.17 billion, a 6.1% increase year-over-year, surpassing estimates of $6.14 billion, demonstrating resilience amid global travel market disruptions.
- Profit Guidance Cut: Despite improvements in net yields and earnings per share, Carnival lowered its full-year adjusted EPS guidance from $2.48 to $2.21 due to rising fuel costs, anticipating a $0.38 headwind from oil price spikes.
- Debt Management Progress: The company continues to reduce its debt post-pandemic, with interest expenses decreasing from $377 million to $291 million, indicating a positive trend in financial health despite rising overall costs.
- Long-Term Growth Targets: Carnival unveiled its new PROPEL program, aiming for a 2.75 net debt/adjusted EBITDA ratio by 2029, planning to refurbish its fleet and destinations, reflecting confidence in future growth prospects.
See More
Carnival Reports Strong Earnings but Shares Decline
- Strong Earnings Report: Carnival's fiscal Q1 revenue reached $6.17 billion, a 6.1% increase year-over-year, surpassing estimates of $6.14 billion, indicating robust market demand and improved passenger yields.
- Profit Improvement: GAAP operating income rose from $543 million to $607 million, while adjusted earnings per share increased from $0.13 to $0.20, exceeding the consensus estimate of $0.18, reflecting the company's strong recovery post-pandemic.
- Debt Management Progress: The company successfully reduced its interest expense from $377 million to $291 million, demonstrating ongoing efforts to pay down the substantial debt incurred during the pandemic, thereby enhancing financial stability.
- Cautious Outlook: Despite management's expectation for a 2.75% increase in net yields for the year, the adjusted earnings per share guidance was lowered from $2.48 to $2.21 due to rising oil prices, highlighting the potential impact of external uncertainties on profitability.
See More
Entergy Partners with Meta, Stock Surges Over 8%
- Entergy Stock Surge: Entergy's stock jumped over 8% after announcing a partnership with Meta, which is expected to save Louisiana customers approximately $2 billion over 20 years, significantly enhancing the company's competitive position in the energy market.
- Carnival Lowers Profit Guidance: Carnival revised its full-year adjusted profit forecast down to about $2.21 per share from $2.48, resulting in a more than 3% drop in its stock price and causing peers like Norwegian Cruise Line and Royal Caribbean to experience similar declines.
- Meta Stock Decline: Meta's shares fell over 3% due to losing two pivotal court cases and announcing layoffs, leading to an 11% drop over the week, highlighting the legal and operational challenges the company is currently facing.
- Argan Exceeds Earnings Expectations: Argan reported fourth-quarter earnings of $3.47 per share on revenue of $262.1 million, surpassing analyst expectations, which led to a 35% increase in its stock price, showcasing its strong market performance and growth potential.
See More
Carnival Corp Surpasses Q1 Forecasts and Announces $2.5B Buyback — What’s Causing CCL Stock to Decline Today?
Carnival Corp's Financial Outlook: The company forecasts an average Brent crude price of $90 per barrel for April and May, while also approving a $2.5 billion share buyback program as part of a broader $14 billion strategy to enhance shareholder value.
Earnings and Revenue Performance: Carnival Corp reported better-than-expected first-quarter revenue of $6.17 billion, surpassing estimates, and earnings per share of $0.19, which also exceeded consensus estimates.
Impact of Oil Prices: The company has adjusted its full-year profit outlook for 2026 down to $3.07 billion due to rising fuel prices, which are expected to pressure margins, with Brent crude futures surging over 50% since late February.
Positive Booking Trends: Despite challenges, bookings for 2026 have doubled, positioning the company well for the remainder of the year, with nearly 85% of the year's bookings already secured at historically high prices.
See More
