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Carnival Sunk by Profit Warning

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LONDON -- The shares of Carnival (LSE: CCL  ) (NYSE: CCL  ) have dropped 6% as of 9:20 a.m. EDT after the world's largest cruise company issued an overnight profit warning. Carnival, which was rocked last year by the Costa Concordia disaster, said its 2013 earnings would likely be between $1.45 and $1.65 per share. This was reduced from a previous EPS range of $1.80 to $2.10.

Carnival has suffered a string of high-profile calamities recently, including an engine fire on its Triumph cruise ship in February that left 4,000 passengers adrift for five days without adequate sanitation or electricity.

In light of these PR disasters, the cruise company has slashed ticket prices in an attempt to attract wary passengers. Carnival said that despite increasing cruise-booking volumes, this ticket-pricing policy had led to lower-than-expected revenues.

To make matters worse, the company said it expected higher operating costs and worse-than-expected voyage cancellations to wipe a further $0.10 from this year's per-share earnings.

With a market cap of £4.5 billion, Carnival's shares trade at 22 times expected earnings and offer a prospective dividend yield of 3.3%. Of course, whether that valuation, today's update, and the future prospects for the cruise industry all combine to make shares of Carnival a buy remains your decision.

However, if you're looking for a higher-yielding investment opportunity, you may want to look at "The Motley Fool's Top Income Stock For 2013." The Fool's choice has one of the most impressive dividend track records on the London market and provides a market-beating 5% yield. Just click here to download your free report!

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Related Tickers

5/24/2016 11:53 AM
CCL $3562.19 Down -21.81 -0.61%
Carnival CAPS Rating: No stars
CCL $50.83 Up +0.92 +1.84%
Carnival Corp CAPS Rating: ***