No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Shares in cruise operator Carnival dropped sharply on Friday afternoon as record first-quarter results and a new share buyback were overshadowed by a cut to full-year profit guidance owing to higher fuel costs.
Carnival said it now expected adjusted earnings per share to be around $2.21 for 2026, up from $2.10 in 2025 but below the previous guidance of $2.48. For the second quarter, it expects to report adjusted EPS of $0.34, 4cents below the current consensus forecast.
The negative impact to adjusted net income from elevated fuel prices will be an estimated $500m, though will partly be offset by $150m in operating improvements.
Spot oil prices are currently trading near a four-year high with Brent crude up 1.7% at $103.60 a barrel on Friday afternoon as ongoing conflict across the Persian Gulf continues to disrupt oil shipments through the Strait of Hormuz, as well as directly impacting oil production.
"The company's guidance reflects the purchased price of fuel for the month of March and early April, Brent averaging $90 per barrel for the remainder of April and May, Brent averaging $85 per barrel for the third quarter, and Brent averaging $80 for the fourth quarter," Carnival said in a statement.
For the first quarter, the firm reported adjusted EPS of $0.20, up 50% on last year, helped by record revenues of $6.2bn (+6.1%) and a 10% increase in gross margin yields.
Meanwhile, bookings for 2026 were up double-digits at an all-time high, with strong demand extending into trips for 2028, the company said.
"Bookings for 2026 were up double digits, which further pulled forward our already record booked position for the remainder of the year at historically high prices (in constant currency)," said chief executive Josh Weinstein.
"With nearly 85 percent of 2026 already on the books and an even smaller amount of inventory available compared to this time last year, we are well positioned to deliver yield improvement in the back half of the year. Continued demand strength is also clearly reflected in higher first quarter onboard revenues and an acceleration in pre-cruise onboard sales."
In addition to a new $2.5bn share repurchase programme, the company also introduced its new 'PROPEL' long-term profit and return targets for 2029, forecasting 50%+ growth in adjusted EPS compared with 2025 and 40%+ of cash from operations distributed to shareholders, equalling around $14bn.
Nevertheless, the stock was down 4.4% at 1,811p by 1525 GMT.