Carnival shares sink by 9% following second quarter results

Record high revenue couldn’t calm the rough waters

Article updated: 26 June 2018 9:00am Author: Graham Spooner

  • The cruise ship operator reported revenue of US$4.4bn compared with US$3.94bn in the previous year’s second quarter
  • Despite reports of a record second quarter, the share price has moved lower owing to higher costs, adverse currency movements and increased fuel prices
  • The Share Centre maintains its ‘buy’ recommendation for medium risk investors seeking a balanced portfolio of income and growth

The world’s largest travel leisure company reported its second quarter results this afternoon, presenting a bit of a mixed bag. While the Florida-based company beat Wall Street expectations and reported record second quarter results, its share price has tumbled in reaction.

Higher fuel prices, adverse currency movements and hurricanes in the key Caribbean market have long worried the cruise company and its investors, culminating in a 9% slump in Monday trading.

Looking ahead, Carnival cut its earnings per share forecast for the year to US$4.15 to US$4.25 from its previous guidance in the range of US$4.20 and US$4.40. The forecast falls below consensus estimates of US$4.36.

The quarter itself produced record revenue and there remains “sustained strength in booking trends” as the group recently delivered its 26th ship, Carnival Horizon. Its brand portfolio includes Princess Cruises, Holland America Line, Seabourn, Cunard, AIDA Cruises, Costa Cruises, P&O Cruises and Fathom, operating approximately 100 cruise ships in total.

The company remains a giant in the sector, serving approximately 5 million guests a year and cruises are one of the fastest-growing parts of the leisure sector, with holiday volumes up 20% over the past year. That trend is quite likely to continue, and as the biggest operator, Carnival is in a strong position to benefit. Despite the slump, we believe this to be temporary and thus maintain our ‘buy’ recommendation.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Graham Spooner portrait photo
Graham Spooner

Investment Research Analyst

Graham started out as a fully authorised dealer on the Stock Exchange trading floor and for various banks, before becoming an FSA-approved investment adviser. Now a respected voice in the media, Graham’s share tips and comments on the markets are frequently sought by the national press.