CCL stock drops on weak forecast for Q4.

[DaveOKC]

Carnival Corp. CCL, -8.05% CUK, -7.53% shares sank 8% in early Thursday trading after the cruise company gave fourth-quarter guidance below FactSet expectations. Third quarter net income totaled $1.71 billion, or $2.41 per share, up from $1.33 billion, or $1.83 per share, for the same period last year. Adjusted EPS was $2.36. Revenue totaled $5.84 billion. The FactSet consensus was for EPS of $2.32 and revenue of $5.80 billion. Passenger ticket sales grew to $4.35 billion from $4.14 billion last year, and onboard and other revenue grew to $1.32 billion from $1.22 billion. Carnival now expects fourth-quarter adjusted EPS in the range of 65 cents to 69 cents, below the 73-cents FactSet consensus. Full-year adjusted EPS is expected to be in the range of $4.21 to $4.25. The FactSet consensus is for $4.24. Carnival shares have fallen 7% for the year to date while the S&P 500 indexSPX, +0.25% ] has gained nearly 9%.

[drowelf]

RCL fell by almost 3% too.

 

We own both so we can take advantage of Stockholders benefit OBC no matter where we cruise.

[DaveOKC]

More info:

 

Sept 27 (Reuters) - Carnival Corp on Thursday forecast fourth-quarter profit below Wall Street estimates as the world's largest cruise operator expects to take a hit from higher fuel costs, sending its shares down as much as 8.6 percent.

The company said it expected fourth-quarter earnings of 65 cents to 69 cents per share, well below analysts' estimate of 73 cents.

However, Carnival reported strong third-quarter revenue and profit as it benefited from higher ticket prices and on-board spending.

[chengkp75]

More info:

 

Sept 27 (Reuters) - Carnival Corp on Thursday forecast fourth-quarter profit below Wall Street estimates as the world's largest cruise operator expects to take a hit from higher fuel costs, sending its shares down as much as 8.6 percent.

The company said it expected fourth-quarter earnings of 65 cents to 69 cents per share, well below analysts' estimate of 73 cents.

However, Carnival reported strong third-quarter revenue and profit as it benefited from higher ticket prices and on-board spending.

 

This is one problem with Carnival Corp's stated dislike for bunker contracts, as they are the only one of the major lines that don't use these. Their earning estimates will be more volatile than other lines because their fuel costs will be more volatile.

[mrmoviezombie]

Still up 38% for me, so more than happy with CCL.

[AV8rix]

This is one problem with Carnival Corp's stated dislike for bunker contracts, as they are the only one of the major lines that don't use these. Their earning estimates will be more volatile than other lines because their fuel costs will be more volatile.

 

Now that IS interesting! I didn't know that (I'm a shareholder).

But then, everything that you've ever posted on ANY subject is interesting and informative and I'm always grateful for your presence on these boards.

[chengkp75]

Now that IS interesting! I didn't know that (I'm a shareholder).

But then, everything that you've ever posted on ANY subject is interesting and informative and I'm always grateful for your presence on these boards.

 

I was surprised myself when Mr. Donald made that statement earlier this year. I thought using fuel contracts was universal after the 80's.

[Krazy Kruizers]

Thanks Dave and chengkp75 for all the information.

Very interesting especially about the fuel contracts.

[molole]

Time to buy? :D

[sfaaa]

Considering this: Buy low sell high. And if you snooze, you lose.

 

Disclaimer: This is not a stock recommendation. Always use your common sense when investing.

[DaveOKC]

Time to buy? :D

 

That is always a tough question. In this case, I have concerns about the upward movement in stock price until the underlying reason (high oil prices) stated by the company as the reason for lowering guidance for 4Q abates.

 

Secondarily, after a 5% drop in stock price, most stocks tend to decline a bit more during the following couple of days, mostly due to analysts lowering their guidance estimates and recommendations.

 

But of course, you NEVER KNOW for sure.

[Cruzin with BQ & CQ]

The one thing I read is there is some concern about supply vs demand because of all the new ships coming online. Future inventories may outpace demand, lowering net revenue due to pricing reductions per ship. I think a lot will hinge on economic growth.

[mcrcruiser]

The one thing I read is there is some concern about supply vs demand because of all the new ships coming online. Future inventories may outpace demand, lowering net revenue due to pricing reductions per ship. I think a lot will hinge on economic growth.

 

We are stock holders .We too were unaware that Carnival corp did not hedge their fuel contracts . Also ,during the lower interest rate periods corporations borrowed money for expansion purposes .Call it leveraged loans & adds to their over all debt . The cruise industry is a prime example adding many new ships . Well that debt needs to be paid back & interest rates are now climbing . We hope that Carnival can make enough top line sales growth & bottom line profits in the ensuing quarters to head off these interest rate head winds that are coming :)

[Gail & Marty sailing away]

Thanks for sharing the info.

 

Sent from my SM-G930T using Forums mobile app

[caribill]

The one thing I read is there is some concern about supply vs demand because of all the new ships coming online. Future inventories may outpace demand, lowering net revenue due to pricing reductions per ship. I think a lot will hinge on economic growth.

Carnival Corp (which owns H.A.) has a strategy of what they call "measured capacity growth" which limits the capacity growth to what is perceived to be less than increased demand. For 2019, the CCL Corp fleet with have capacity growth of 4.7% with the introduction of new ships and the disposal of four older ones.

[Aruba]

Can someone explain what a "bunker contract" is?

[chengkp75]

Can someone explain what a "bunker contract" is?

 

It is a contract to buy bunkers at a fixed price over a period of time. It is like any commodities contract, and smooths out the swings of fuel prices. Sometimes you pay more than market price, sometimes you pay less than market price. I have the same thing at home, setting a fixed price for home heating oil for the period of this winter.

[Underwatr]

"Bunker" is cheap, heavy petroleum used as fuel for ship engines, I think.

 

For the benefit of others. I know chengkp75 knows.

[chengkp75]

"Bunker" is cheap, heavy petroleum used as fuel for ship engines, I think.

 

For the benefit of others. I know chengkp75 knows.

 

Actually, "bunkers" are any ship's fuel, whether residual fuel (what you noted), marine diesel fuel, or LNG. The term refers back to the days of coal.

[sail7seas]

RCL fell by almost 3% too.

 

We own both so we can take advantage of Stockholders benefit OBC no matter where we cruise.

 

 

I think lots of people probbaly do that,,,,,,,,,,,,,, or should :)

[sail7seas]

RCL fell by almost 3% too. We own both so we can take advantage of Stockholders benefit OBC no matter where we cruise.

I think lots of people probably do that,,,,,,,,,,,,,, or should :)

[HUNKY]

Couldn't the cruise lines just restart the fuel charge they've used in the past?

 

 

Sent from my iPhone using Tapatalk

[DaveOKC]

Couldn't the cruise lines just restart the fuel charge they've used in the past?

 

 

Sent from my iPhone using Tapatalk

 

They could of course, but it also depends on what the competition is doing in this area.

[chengkp75]

Couldn't the cruise lines just restart the fuel charge they've used in the past?

 

 

Sent from my iPhone using Tapatalk

 

Bunker prices were in the $600/ton range back in 2013, and crude prices were $110/bbl (about $770/ton), now crude is $70/bbl ($490/ton) and bunkers are in the $400-450/ton range. So, the cost of bunkers in relation to crude prices has increased. If they didn't use the fuel surcharge back then, they wouldn't do it now. It is just that their predictions of fuel cost used to make their 4th quarter earnings predictions were too low, probably because they were based on the Jan '18 time frame, when bunkers were $350-400/ton. My opinion is that fuel contracts that other cruise lines use, would have smoothed out price increases like those from early '18 to now, as this is rather short term, rather than the larger swing from 2013, and that Carnival saw the essentially downward trend over the last 5 years, and did not anticipate the current upward swing, though fuel prices have been generally rising since bottoming in 2015.

[hrhdhd]

RCL fell by almost 3% too.

 

We own both so we can take advantage of Stockholders benefit OBC no matter where we cruise.

 

The RCCL stockholders' credit is practically useless because it can't be combined if one has any other offer. Usually people get it on TAs and not much else.