Skip to Content
Stock Strategist

Carnival's Attractive Even With Lower Outlook

Despite slower yield growth, we expect operating cash flow to still rise.

Mentioned: , , ,

 Carnival’s (CCL)/(CUK) outlook for slower-than-expected yield growth in 2019 weighed on the shares after the cruise operator’s fiscal fourth-quarter report. However, we believe the stock is attractive even as we reduce our fair value estimate.

The company now expects 2019 constant-currency yield growth of just 1%, a significant slowdown from the 4% it was able to capture in 2018, but also a tick down from the implied first-half 2019 guidance offered last quarter. We think most investors expected that the first half would post near the bottom of the range but the second half would be stronger, inferring a full-year lift from 2018, which has failed to surface. More disconcerting is whether the failure to capture meaningful yield growth is predictive of consumers being less willing to spend on cruises, something we don’t believe we will have a clear picture of until mid-2019. For now, all measures point to spending remaining healthy for U.S. consumers, which represent around half of Carnival’s sourced customers.

Jaime M. Katz does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.