Carnival Cruise Line stock price drops despite Q1 earnings surpassing expectations

Investing.com - On Friday, Carnival Cruise Line (NYSE: CCL) reported first-quarter results that exceeded Wall Street expectations, but the stock price fell 3.2% as investors were concerned about the impact of rising fuel costs on the company’s outlook.

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The cruise operator reported an adjusted earnings per share of $0.20, surpassing the analyst expectation of $0.18. Revenue reached a record $6.2 billion, exceeding the market consensus of $6.13 billion. Despite a $54 million adverse impact from fuel prices and exchange rates relative to guidance, the company still achieved an adjusted net profit of $275 million.

Following the news release, the stock price dropped 3.2%. The company raised its full-year operational outlook by nearly $150 million in adjusted net profit, but this improvement only partially offset the over $500 million impact from recent fuel price fluctuations.

The company stated that due to the recent surge and volatility in fuel prices caused by the conflict in the Middle East, it believes “it is reasonable to forecast based on fuel procurement prices from March and early April.”

“The company’s guidance reflects the fuel procurement prices from March and early April, with an average Brent crude oil price of $90 per barrel for the remainder of April and May, an average price of $85 per barrel for the third quarter, and an average price of $80 per barrel for the fourth quarter,” Carnival stated.

For fiscal year 2026, Carnival expects adjusted earnings per share of approximately $2.21 and adjusted net profit of about $3.07 billion.

“We achieved a strong start to the year, with record first-quarter operational performance that exceeded guidance, driven by healthy fundamentals and robust execution across the business,” said CEO Josh Weinstein.

The net yield at fixed exchange rates reached a record high, growing by 2.7%, exceeding guidance by more than 1 percentage point. Bookings for 2026 have seen double-digit growth, with nearly 85% of bookings for the year already completed, and prices at fixed exchange rates are at historical highs. Customer deposits reached a record of nearly $8 billion in the first quarter, up nearly 10% year-over-year.

For the second quarter, Carnival expects adjusted earnings per share of approximately $0.34, with net yield growth of about 2.0% at fixed exchange rates.

The company announced the PROPEL plan, a new set of long-term goals through 2029, including a return on invested capital exceeding 16%, and adjusted earnings per share growth exceeding 50% starting in 2025. The board also approved an initial $2.5 billion share repurchase program, which will commence after the shareholder meeting expected on April 17, 2026.

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