Investors Are Not Pleased With Carnival Corp’s Earnings Results
Carnival Corp (NYSE: CCL), the popular leisure travel company that operates cruises throughout the world, saw its shares trade lower by nearly 2 percent on Monday after its third quarter earnings results and forward looking guidance came in worse-than-expected.
Carnival said that it earned $1.92 per share in the third quarter but Wall Street analysts were modeling the company to earn $2.14 per share. Revenue for the quarter was slightly higher on a year-over-year comparison and rose to $5.1 billion from $4.9 billion.
Adjusted net income for the quarter was nearly flat on a year-over-year comparison at $1.4 billion.
Carnival’s stock opened for trading at $47.96 and quickly rose to an intra-day high of $48.25 before selling off. By the end of the morning, shares traded as low as $45.80 but have since rebounded above the $46.50 level.
During the quarter, Carnival’s gross cruise costs including fuel fell 0.2 percent but rose on a constant currency basis (excluding fuel) by 5.5 percent although this was lower than the company’s prior guidance of a six to seven percent increase.
Carnival’s quarter was also marked by the grand opening of a 110,000-square foort Arison Maritime Center in Netherlands which will serve as a training center. The facility includes four bridge and engine room simulators and more than 6,500 officers will be trained annually across the company’s 10 different brands.
In addition, the company reached an agreement with two shipbuilders to construct three 180,00-ton cruise ships. Two of the ships will be added to its fleet in 2020 and the other will be added in 2022.
Carnival continued its shareholder friendly initiatives during the quarter as it bought back $700 million worth of its own stock, bringing its total share repurchases over the past year to $2.5 billion which represents approximately 7 percent of its entire value based on Monday’s valuation of nearly $35 billion.
Looking forward, Carnival revised its full year fiscal 2016 earnings per share guidance higher to a range of $3.33 to $3.37 from a previous range of $3.25 to $3.35. The company’s guidance implies nearly a 25 percent earnings growth for the full fiscal year. However, management shied away from issuing any guidance for fiscal 2017 and this may be contributing to Monday’s sell-off.