Carnival Corp (NYSE: CCL)
Earnings Report
Before the market opened on Tuesday, Carnival Corp (CCL) reported better than expected Q3 earnings but despite the beat, shares sold off after the company provided a downbeat fourth-quarter profit outlook. Adjusted per share earnings came in at $1.75 per share versus the analyst estimate of $1.63 on revenues of $4.88 billion versus the $4.81 billion estimated. Both were beats compared to analysts but CCL lowered their earnings per share to the range of 36-40 cents per share down from 46 cents which was originally projected. Shares opened down just over a percent and quickly sold off to lows of $49.55 with a close of $49.79, a 5.48% decrease from yesterday’s close. I think this sell off could have been a bit of an overreaction and maybe the weak market had a role to play but CCL has been a strong performer this year and still has potential to finish strong. Today CCL was upgraded to a buy from neutral at Nomura with a price target raise to $62 from $53, this should help investors feel better about the recent sell off and maybe even get some more buyers in the stock.
President and CEO Arnold Donald stated in the conference call,
“Our team continues to deliver along our path toward double-digit return on invested capital in the next three to four years. In fact, we have just enjoyed a record quarter, and are on track to achieve a nearly 35% annual non-GAAP earnings improvement. That’s over $0.5 billion of year-over-year profit improvement, on top of the 25% annual earnings improvement we achieved in 2014. This year is clearly trending ahead of pace, with constant currency yield now forecasted to be up 4%. We overcame numerous headwinds, including ongoing macroeconomic malaise in Europe, global geopolitical disruptions, public health scares like MERS, and even ship construction delays.” TheStreet
Fundamentally this company is strong and should remain strong for the foreseeable future. This should be a good one to keep an eye on.
CCL Technicals
Shares sold of hard after CCL reported weak earnings in the premarket session and didn’t get much relief throughout the day as prices consolidated for the first hour and then took a pounding. CCL traded all the way down to 49.60 where it found a level of support that held most of the day before closing at $49.79. Keep an eye on support levels at $50 and the 200d moving average which is currently sitting at $47.45. Resistance should come in at $51.57 and $52.05. As of Tuesdays close, CCL is up 8.5% for the year and looks to add to this impressive gain so far.
Looking at CCL on a larger scale you will see that it has been a strong performer for 2015 and has only hit the 200 day moving average once this year when the market took a huge hit. It has been in steady uptrend with highs hitting $54.05 back in July and lows of $42.51 in February. I would expect it to keep this trend going and would really like to see it test new highs before the end of the year. Look for Carnival to get a bounce in the near future and while it’s down it may be a good time to start looking for some entry points. Keep an eye on key levels especially the 200 day moving average and the big $50 level. The only thing that worries me is that the recent push up didn’t break previous highs so that will be an area to watch in the future.
Company Profile
Carnival Corp. operates luxury cruises ships. The company offers holiday and vacation products to a customer base that is broadly varied in terms of cultures, languages and leisure-time preferences. It operates through two geographical segments: North America and Europe, Australia & Asia Cruise Brands. The North America Cruise segment includes Carnival Cruise Lines, Holland America Line, Princess Cruises and Seabourn. The Europe, Australia & Asia Cruise segment includes AIDA Cruises, Costa, Cunard, Ibero Cruises, P&O Cruises (UK) and P&O Cruises (Australia). The company also operates a Cruise Support segment, which provides corporate-wide services for the benefit of its cruise brands. It also owns a tour company, which provides hotel, tour and transportation services through Holland America Princess Alaska Tours. Carnival was founded in 1972 and is headquartered in Miami, FL. MarketWatch
