22nd September 2015
As Carnival reports this afternoon, Ian Forrest, investment research analyst at The Share Centre, explains what it means for investors…
Shares in cruise operator Carnival have strongly outperformed the market so far this year, according to good news shared by the company today. A third quarter trading update showed net revenue yields up 4.3%, which was better than expected, and earnings were up 11%. Advanced bookings for the first half of next year are well ahead of those from last year, and the company said it was on track to deliver a 35% increase in full year earnings.
While some in the market were slightly disappointed with the company’s forecast for fourth quarter earnings, we believe these are very solid figures and show a continuation of the improving trends seen in recent results. As a result, we continue to recommend Carnival as a strong ‘hold’ due to its good performance, increasing capacity, the benefit of lower fuel costs and exposure to growing demand for leisure services in Asia. For investors interested in this sector, we prefer TUI Group and EasyJet due to their more attractive valuations and better dividend yields.