Should Investors Buy This Cruise Stock Down More than 50%?

Carnival Corporation & plc (CCL) functions as a leisure travel company, with its ships visiting approximately 700 ports. It owns and operates hotels, lodges, glass-domed railcars, and motor coaches and offers port destinations and other services. The company operates in…

the United States, Canada, Continental Europe, the United Kingdom, Australia, New Zealand, Asia, and internationally.

Most cruise operators suffered heavy losses due to the COVID-19 pandemic-led restrictions. Although the industry made a strong recovery with the easing of travel restrictions and the reopening of the economy, CCL has lost 53.4% year-to-date.

CCL’s occupancy in the second quarter ended May 31, 2022, rose to 69% from 54% in the previous quarter. More than 90% of the company’s fleet has become operational, and its booking volumes in the second quarter for upcoming sailings were nearly double the bookings in the first quarter. Cash from operations turned positive in April and was positive for the second quarter.

The company believes that several risks and uncertainties may affect its business. Among the risks, COVID-19 may continue to significantly impact its financials and operations as it is expected to affect people’s ability or desire to travel on cruises. Also, the ongoing war in Ukraine might impact its operating costs and profitability.

Rising fuel prices may severely affect the company’s ability to control its cost. Also, high fluctuations in foreign currency exchange rates may affect its financials.

The stock has declined 30.6% over the past month to close the last trading session at $9.38. It is currently trading 65.7% below its 52-week high of $27.39, which it hit on September 27, 2021.

Here’s what could shape CCL’s performance in the near term:

Disappointing Financials

For its fiscal second quarter ended May 31, 2022, CCL’s operating loss and net loss came in at $1.47 billion and $1.83 billion, compared to $1.61 billion and $2.07 billion, respectively, in the year-ago period. The company’s adjusted loss per share narrowed 12% year-over-year to $1.61.

Mixed Analyst Estimates

CCL’s EPS for fiscal 2022 is expected to remain negative. The company’s revenue for fiscal 2022 and 2023 is expected to increase 601.7% and 64.2% year-over-year to $13.39 billion and $21.99 billion, respectively. It failed to…

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