Carnival Corporation (NYSE: CCL) is scheduled to release its fiscal first-quarter earnings before the opening bell on Tuesday, March 22, 2010. Analysts, on average, expect the company to report earnings of $0.19 per share on revenue of $3.31 billion. In the year ago period, the company reported earnings of $0.22 per share on revenue of $3.10 billion.
Carnival Corporation operates as a cruise and vacation company in the United States and internationally. The Company has a portfolio of cruise brands and is a provider of cruises to all vacation destinations.
In the preceding fiscal fourth-quarter, the Miami, Florida based company's net income was $248 million, or 31 cents a share, compared with a profit of $193 million, or 24 cents a share, in the year-ago period. Revenue grew to $3.50 billion from $3.28 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of $0.32 per share on revenue of $3.36 billion.
Early in March, the company said that earnings per share for the first quarter ended February 28, 2011 was $0.19, at the high end of its previous guidance range of $0.15 to $0.19. Adjusted earnings per share for the first quarter of 2010 was $0.12 before the favorable impact of $0.10 per share of unusual items, resulting in a reported earnings per share of $0.22. The company also slashed its earnings forecast for the full-year 2011, noting that fuel prices have soared since it had provided initial guidance back in December. The company expects the current fuel prices and the currency exchange rates to negatively impact earnings for the full-year 2011 by about $0.40 per share. Further, the company estimates the impact of itinerary changes in the Middle East and North Africa to have a negative impact of about $0.05 on earnings for the remainder of the year. Based on the above factors, the company now forecasts full year 2011 fully diluted earnings per share to be in the range of $2.50 to $2.60, compared to its December guidance range of $2.90 to $3.10 and fiscal 2010 of $2.47.
The company has benefited from a strong booking and pricing trend. However, surging fuel prices, a greater exposure to sluggish European markets, lower Caribbean prices in the first half of 2011 and the overall economic uncertainty will likely hurt Carnival’s growth in the near term.
However, the cruise sector has been struggling with currency fluctuations lately. . With an increasingly international customer base, companies have become more susceptible to foreign currencies and an improving dollar which hurts their revenues. Carnival does not hedge its exposure to rising fuel costs and more than half of its revenues come from passengers outside the U.S. As a result, the company’s result will be more negatively impacted by fluctuation in fuel expenses and currency exchange rates.
In January, the company sharply boosted its regular quarterly dividend to $0.25 per share from the $0.10 per share it announced when it reinstated the dividend in early 2010.
The company's stock currently trades at a forward P/E (fye November 30, 2012) of 11.70 and PEG Ratio (5 yr expected) of 0.86. In terms of stock performance, Carnival shares have gained nearly 3% over the past year.
Full Disclosure: None.
