Wednesday preview: Carnival report first quarter earnings

Cruise operator Carnival is expected to report an increase in first quarter earnings on Wednesday as bookings rise.

Numis predicts underlying earnings per share of $0.32, compared to $0.20 the previous year.

"We believe that industry fundamentals are improving but maintain our HOLD for three key reasons: there is a danger that the Zika virus impacts bookings especially given the importance of the Caribbean (c.30% of CCL capacity); the sector is still vulnerable to intensifying customer concern about terrorist attacks, and; the outlook in China/Asia remains uncertain," Numis analyst Wyn Ellis said.

In November, the company said in its full year results that cumulative advance bookings for the first three quarters of 2016 were well ahead of the prior year at slightly higher constant currency prices.

Carnival guided for full year 2016 earnings per share between $3.10 to $3.40, versus $2.70 in 2015, net revenue yield to be up about 3% and net cruise costs, excluding fuel, to be up 2%.

Numis believes there is a risk to downgrade to guidance due to adverse foreign exchange and fuel price movements.

"However, we believe that there is earnings upside potential as we move through the year and we currently forecast 2016 adjusted EPS of $3.30," Ellis said.

"We currently expect Carnival to grow its capacity by around 3.5% in 2016 and that industry growth will be about 4% (2017, 4.2% and 5% respectively)."

Wednesday 30 March

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