Carnival stock jumps despite a stormy 2019 (numbers can change the tides)
If two Carnival ships collide in a Mexican port... the stock still jumps 9% because Carnival reported strong earnings literally as that accident was unfolding. It's been a rough year for the cruiseliner — Case(s) in point:
- Natural Disaster: Hurricane Dorian, one of the most powerful hurricanes ever recorded, made many cruises not happen.
- Geopolitics: President Trump reinstated the Cuba travel ban, while unstable politics in the Arabian Gulf limited Carnival's sailing latitude.
- Reputation Sinkers: That memed-about collision between a pair of Carnival ships last week looks bad. So is having to cancel 8 cruise sailings after new ships were delayed.
- Euro Downturn: As the European economy limps along with low growth rates, Carnival sales struggle — Europeans make up a hefty 30% of Carnival's business, and they don't splurge on cruises when their "European carryall" purses are hurting.
Does this mean the buffet is still open?... While Carnival didn't have 2019 under (cruise) control, the stock inched up 3% this year. Plus, just this week in time for the holidays, analysts optimistically raised their price targets for 2020, thinking Carnival shares can cruise higher.
Show me the money... At the end of the day, a company's present and future profitability matter most. Carnival didn't have much control over the issues it faced this year (except for that fender bender). While Carnival's global sales have lagged, its critical North American revenues have risen consistently without life vests (and the numbers below make up about over 50% of Carnival's sales):
- $8B in 2016
- $9B in 2017
- $10B in 2018