Shares of cruise ship operator Carnival Corp. (NYSE: CCL) dropped as much as 8.7% in trading Thursday after reporting earnings from the fiscal third quarter and full-year guidance. Some of the losses were clawed back by midday, and shares were only down 4.7% at 12:20 p.m. EDT.
Revenue was up 5.8% to $5.84 billion and topped estimates from Wall Street of $5.81 billion. Net income jumped 28.4% to $1.71 billion, or $2.41 per share. On an adjusted basis, which pulls out one-time items, earnings were $2.36 per share, beating estimates by $0.04.
It was really guidance that threw investors for a loop today. Management expects fiscal fourth-quarter revenue to be up 1.5% to 2.5% on a constant currency basis and earnings of $0.65 to $0.69 per share, which fell below the $0.73 that analysts expected. Higher fuel prices and headwinds from currency exchange rates were to blame for the lower-than-expected guidance.
If you add the third and fourth quarters together, results are about in line with Wall Street expectations, so I don't see a reason to panic about Carnival Corp. today. The headwinds from fuel and currency fluctuations are also not in the company's control and will be volatile over time. Given Carnival's expected organic growth and strong profitability, today looks like a buying opportunity as traders panic over short-term factors that might even out in the future if fuel or currencies becomes a tailwind for the company.
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