The company’s shares have trailed by more than 20% over the past year.
On Thursday, Carnival’s stock fell more than 10% after the company lowered its full-year guidance. The company’s shares were already down more than 4% in 2019 and have fallen by more than 20% in the past year.
This is the second time in three months Carnival has lowered its yearly outlook. This caused some discontent among investors, in spite of what was actually a positive earnings report.
Here’s what’s happening…
The details on Carnival’s earnings report
When Carnival released its latest earnings report on Thursday, both the earnings and quarterly revenue beat investor expectations. Earnings reached 66 cents per share, instead of the expected 61 cents per share. And revenue reached $4.84 billion, instead of the expected $4.49 billion.
But the company lowered its guidance for the rest of the year, which soured investor sentiment. As the reason for the lowered outlook, Carnival pointed to the government’s ban on travel to Cuba and issues with its Vista departures.
Issues with Carnival Vista ships
Carnival recently canceled three Vista departures that were scheduled for July due to technical issues. The ship is suffering from a maximum cruising speed, which has impacted its departure times. Carnival will issue these passengers a full refund.
The U.S. changes its policy on Cuba
And Carnival has also been affected by the U.S. changing its policy on travel to Cuba. Carnival said this has impacted its travel itineraries, though Cuba is only a small portion of the company’s total travel capacity.
Carnival deals with legal issues
Carnival also received a $20 million fine after dumping garbage into the ocean, which violated pollution regulations. And a pending lawsuit alleges Carnival retained an elderly man on board who was suffering from a heart attack.
Will things improve for Carnival?
Of the major cruise lines, Carnival has largely underperformed in comparison to its competitors, Norwegian Cruise Line Holdings and Royal Caribbean Cruises. And the company’s stock lost 13.5% in comparison to the overall industry growth of 2%.
And due to the weaker outlook on the company, it doesn’t seem like Carnival’s stock will be bouncing back anytime soon.
