Carnival Earnings Miss

[Cruzin with BQ & CQ]

Carnival missed earnings this morning and cut its forecast for next quarter. The stock is off nearly 7% in morning trading. I think this explains a lot of the cutbacks, but I also think it may be only the beginning because they flat out need to generate more revenue, or, cut costs. Wall Street is a cruel master!:mad:

[whogo]

Not good news for those wanting a quality cruise. I had hoped that poor earnings were due to Costa Concordia costs, but passenger numbers are down in spite of fare reductions. Mideast troubles are not helping cruise bookings.

 

I am going to kick myself for not taking advantage of low prices in the Mediterranean.

[RJ2002]

Not good news for CCL.

 

Interesting quote specifically on Carnival from an analyst that follows the stock:

 

Robin Diedrich, consumer discretionary analyst for Edward Jones, said that Carnival's problems earlier this year "were certainly damaging for the brand and cruising in general." Many first time passengers stayed away from Carnival.

"Ultimately people go back to their normal patterns," Diedrich said. "It will take some time and work on Carnival's part."

 

Sounds like Carnival is still struggling to regain passengers. However, from the same AP story, HAL and others appear to be maintaining bookings:

 

Carnival runs cruises under 10 brands including Holland America, Princess and Cunard. Bookings on those lines are running in line with prior years at higher prices.

[peaches from georgia]

Cutting costs hoping to increase profit and stock price can lead to a vicious circle making accomplishing the goal even harder. Cutting costs past a certain point can diminish the product offered the customer which then leads to even lower revenue and lower profits and lower stock prices. If a company is no longer offering a suitable product that attracted its loyal customers in the first place they better be sure they have new customers ready to move in and pay enough for the cheaper product to still make a profit.

[Gail & Marty sailing away]

I hope they leave Holland and Princess alone

[kazu]

Cutting costs hoping to increase profit and stock price can lead to a vicious circle making accomplishing the goal even harder. Cutting costs past a certain point can diminish the product offered the customer which then leads to even lower revenue and lower profits and lower stock prices. If a company is no longer offering a suitable product that attracted its loyal customers in the first place they better be sure they have new customers ready to move in and pay enough for the cheaper product to still make a profit.

 

Absolutely right.

 

Just the same, it might become a very good time to pick up the stock;)

 

You can't keep cutting costs and start to offer a lower quality product and expect people to pay for it.

[Sea Belle]

I was just thinking the same thing, kazu....good time to pick up some stock??? :)

[Ship's Wake]

More expense reductions (ie:cuts) across Carnival Corp lines are coming:

 

It was the first call where Donald played a significant part, and analysts were keen to hear his thoughts on expenses—specifically, whether there may be more synergies among the brands.

 

Expense reductions initiated under vice chairman/coo Howard Frank are on-going, but there will be 'additional opportunities for cost savings. That's what we'll review in upcoming meetings,' Donald said.

 

http://www.seatrade-insider.com/news/news-headlines/carnival-call-dynamics-show-donalds-assurance-in-new-role.html

[Taxguy77]

I was just thinking the same thing, kazu....good time to pick up some stock??? :)

 

I don't think I'm that big a gambler.

Could be good, but could go the other way, too.

[FRANKIEDNYC]

:) Actually they did better than predicted. According to CNBC ,It seems they wrote off several of their catastrophies all at once and still showed a decent profit. The new CEO spoke about a very bright future for them

[Krazy Kruizers]

I just heard a tid bit on our local news about Carnival.

Maybe someone can clear this up -- 30% off profit or sales???

[iancal]

CEO's will always describe the future as bright and promising. These statements have a short term, sometimes longer, impact on the stock price. CEO's get bonused on stock price by way of stock options. It is very much in their financial interest to make statements like this.

 

There is an old saying...if you not make your revenue or margin targets, then you better be sure that your expense line is under budget, ie less than anticipated. That spells cuts.

[sail7seas]

I hope they leave Holland and Princess alone

 

 

Some folks comment they've/we've seen cuts at HAL. Some more noticeable and significant than others. But HAL has not been 'left alone' in terms of cuts.

 

 

[JimnKaren]

This quote is from early this morning. It is from The Ticker Report.

 

Carnival Corp. (NYSE:CCL) had its price target increased by Goldman Sachs Group Inc. from $42.00 to $44.00 in a research report sent to investors on Friday morning, AR Network reports. The firm currently has a buy rating on the stock.

 

CCL closed the day at $34.54, down $2.86 and most of that was at the opening bell. In early June, the price was a bit over $32.00, with a one year high of almost $40.00 in December. Since early in 2011, the lowest price was $29.92, which was before Costa Concordia ran aground. Even then, the price did not go below that $29.92 price.

 

CCL pays a decent dividend, in the past 12 months, it paid $1.50 per share. If you own 100 shares or more, you get on-board credit. History over the past several years shows that investing in CCL stock would get you a decent return, not a loss. NCL does not pay a dividend and RCL pays less than 50 cents per share.

 

Jim

[ScriptOhio]

I just heard a tid bit on our local news about Carnival.

Maybe someone can clear this up -- 30% off profit or sales???

 

And third-quarter profits for Carnival Cruise Line (NYSE: CCL ) fell 30%.

 

http://www.fool.com/investing/general/2013/09/24/4-stocks-making-big-moves.aspx

[KirkNC]

Carnival missed earnings this morning and cut its forecast for next quarter. The stock is off nearly 7% in morning trading. I think this explains a lot of the cutbacks, but I also think it may be only the beginning because they flat out need to generate more revenue, or, cut costs. Wall Street is a cruel master!:mad:

 

I agree, CCL is under increasing pressure which will probably translate into changes in pricing and/or less services.

[Harris Jeffer]

If you own it hold it...I would not buy right now, but would wait until the price starts to rebound......unless you plan to cruise 2 or more times a year, then the OBC makes the return on your investment very good !