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Carnival profits set to buoy share price

Growth in global markets looks set to tap fresh revenue streams for the cruise line company.

A Carnival cruise ship
Source: Bloomberg

Carnival will release its first-quarter figures on Friday 27 March. The company’s adjusted earnings per share is expected to grow from being flat in 2014 to $0.097 in 2015. Year-on-year the firm’s sales have remained relatively resilient, although they have drifted back from $3.585 billion to $3.57 billion. Last year saw the firm lose $14 million however, this year should see pretax profits return with the company expected to post figures of $78.09 million.

The current average twelve-month share price target for the company is called at £31.33, just a fraction above the current market price of £31.11. Of the institutions rating the company, nine have it as a buy, five as a hold, and only two as a sell.  

Cruise line companies appear to be in agreement that the next growth region is Asia, as passenger numbers have grown by 47% from 2013 up to the current 2.2 million users. China is the standout market, with passenger numbers increasing by 79% from 2012 up to 2014. This growth is largely down to the new Chinese middle class who now have far larger spending power due to the more relaxed attitude the Chinese government has to banks’ lending money. Additionally, the average age of passengers in Asia is in their thirties whereas in the western markets it is ten years older.

Shares in Carnival are once again threatening to break the year high of £47.43 as it moves ever closer to the overbought level. Expectations are high for these quarterly figures while forward guidance could be strong too.

Carnival chart
Source: Bloomberg

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