Carnival is the largest cruise company in the world with a total of 100 ships and 212,000 berths. The company offers cruises in North America, continental Europe, the UK, South America and Australia giving consumers plenty of options for some tempting winter sun! The company continues to outperform and recently stated that results were better than expected resulting in it raising its full year guidance. Lower fuel costs and strong booking levels were the main factors boosting the figures and the group said it was on track to deliver 25% earnings growth this year.
Following a dip in the share in April this year, we upgraded our recommendation to a 'Buy' due to relative good value represented by the current price, the strong earnings growth boosted by lower fuel costs and the potential growth in Asia. Strong cashflow is enabling the group to raise dividends quickly and support a share buyback scheme whilst there is the potential benefit of improving relations between the US and Cuba, which could lead to a lifting of the long-running trade embargo and boost demand for cruises in the Caribbean.
Update 29 December:
Fourth quarter results in December showed the company finished the year strongly and the managements said advance bookings for the first three quarters of 2017 were well ahead of 2016 at higher prices. However, rising fuel costs and adverse foreign exchange movements are expected to make progress more difficult.