Carnival shares

[smj777]

Carnival UK have made this announcement today (29/9)

"CARNIVAL CORPORATION & PLC REPORTS ALL-TIME RECORD REVENUE AND DEMONSTRATES STRONG THIRD QUARTER 2023 EARNINGS MOMENTUM"

Why then has the share price dropped by 50p?      Does anyone understand this, if so can you please explain?

[Harry Peterson]

Presumably the market takes a less positive view of the company’s prospects than its directors do, or claim to do.

[Harry Peterson]

And for what it’s worth this is Hargreaves Lansdown’s view:

 

Despite the recent strong performance, the equity valuation remains a long way below the long-term average. Carnival is well-placed to have a good year, but it needs to have a few in a row to make a dent in its debt pile. And with consumers under pressure from all angles, that could still be a big ask. Net debt is sitting at about 7x the mid-point of this year's underlying EBITDA guidance. That's very high. Until it returns towards a low single-digit figure, the risk of default on debt repayments remains higher than we would ideally like.

[molecrochip]

We saw it 3 months and 6 months ago. Drop on the day and rally the week after.

[terrierjohn]

3 hours ago, Harry Peterson said:

And for what it’s worth this is Hargreaves Lansdown’s view:

 

Despite the recent strong performance, the equity valuation remains a long way below the long-term average. Carnival is well-placed to have a good year, but it needs to have a few in a row to make a dent in its debt pile. And with consumers under pressure from all angles, that could still be a big ask. Net debt is sitting at about 7x the mid-point of this year's underlying EBITDA guidance. That's very high. Until it returns towards a low single-digit figure, the risk of default on debt repayments remains higher than we would ideally like.

I always wonder about financial investment companies, if they really could predict successfully, surely they would keep it to themselves so they kept all the profits.

I remember that the one my AZ shares ended up with, would regularly have them down as a weak hold or sell, whilst GSK were always a buy. If I had followed their advise I would have lost a heck of a lot of money.

So I tend to go by gut feel, and my gut at the moment says that cruising will be very profitable over the foreseeable future, and that despite their significant debt, knowledgeable investors will consider them a safe haven for capital growth.

[Port out]

In my opinion as shareholder for 15 years the product has gone downhill with the offer giving passengers very cheap cruises along with high obc. As a very regular cruiser with P&O over 30 years the price being charged is encouraging the cheap Butlin type of passengers so much so that folk like my wife and myself are ditching P&O in their droves to get a quality experience from the likes of Saga. P&O used to be a style above the rest but now, no thank you and no wonder the share price is so low.

Edited September 30, 2023 by Port out

[yorkshirephil]

16 minutes ago, Port out said:

In my opinion as shareholder for 15 years the product has gone downhill with the offer giving passengers very cheap cruises along with high obc. As a very regular cruiser with P&O over 30 years the price being charged is encouraging the cheap Butlin type of passengers so much so that folk like my wife and myself are ditching P&O in their droves to get a quality experience from the likes of Saga. P&O used to be a style above the rest but now, no thank you and no wonder the share price is so low.

I don't dispute that P&O isn't the same as it used to be but P&O is only a small part of Carnival which does have what I would call more upmarket lines; Cunard, Seabourn, AIDA and HAL and in a lot of peoples opinion Princess. I don't think P&O is having as great an effect on the share price as you do.

[Winifred 22]

27 minutes ago, Port out said:

In my opinion as shareholder for 15 years the product has gone downhill with the offer giving passengers very cheap cruises along with high obc. As a very regular cruiser with P&O over 30 years the price being charged is encouraging the cheap Butlin type of passengers so much so that folk like my wife and myself are ditching P&O in their droves to get a quality experience from the likes of Saga. P&O used to be a style above the rest but now, no thank you and no wonder the share price is so low.

All cruise lines stock is low . They are all carrying billions of dollars of debt because of the pause in operations which they are slowly making inroads into. I think it’s quite condescending to people who enjoy Butlins type holidays to imply they should not be able to take a P& O cruise. P & O cruises are for everyone. Everyone’s money is equal. I grew up going to Butlins as it’s all we could afford. I am fortunate enough to be able to afford P&O and Cunard cruises now and enjoy the variety of friendly people I meet. Interesting on my last Britannia cruise more than 2/3 were new to cruise similar even greater  percentage on a recent Cunard 14 day T A. 

[Port out]

52 minutes ago, yorkshirephil said:

I don't dispute that P&O isn't the same as it used to be but P&O is only a small part of Carnival which does have what I would call more upmarket lines; Cunard, Seabourn, AIDA and HAL and in a lot of peoples opinion Princess. I don't think P&O is having as great an effect on the share price as you do.

More upmarket, you are joking, not any longer.

[terrierjohn]

2 minutes ago, Port out said:

More upmarket, you are joking, not any longer.

I take it you don't agree that Cunard, Seabourn, HAL, and AIDA are more upmarket than P&O then?

[Port out]

16 minutes ago, terrierjohn said:

I take it you don't agree that Cunard, Seabourn, HAL, and AIDA are more upmarket than P&O then?

They are just the same as P&O .. there was a time but not now, perhaps try and compare

[majortom10]

2 hours ago, Winifred 22 said:

All cruise lines stock is low . They are all carrying billions of dollars of debt because of the pause in operations which they are slowly making inroads into. I think it’s quite condescending to people who enjoy Butlins type holidays to imply they should not be able to take a P& O cruise. P & O cruises are for everyone. Everyone’s money is equal. I grew up going to Butlins as it’s all we could afford. I am fortunate enough to be able to afford P&O and Cunard cruises now and enjoy the variety of friendly people I meet. Interesting on my last Britannia cruise more than 2/3 were new to cruise similar even greater  percentage on a recent Cunard 14 day T A. 

You wouldn't say that if you were on Arvia recently large families rearranging sunbeds around the pool in the SkyDome. They would spend all day there had no interest in what was elsewhere on the cruise except to go to buffet or 360 for food and drink constantly to get value out of drinks package heard one guy late afternoon saying he had had 11 pints that day.

[galeforce9]

4 hours ago, Port out said:

They are just the same as P&O .. there was a time but not now, perhaps try and compare

Seabourn same as P&O?  Cruise both.  Not the same 

[doog442]

4 hours ago, majortom10 said:

You wouldn't say that if you were on Arvia recently large families rearranging sunbeds around the pool in the SkyDome. They would spend all day there had no interest in what was elsewhere on the cruise except to go to buffet or 360 for food and drink constantly to get value out of drinks package heard one guy late afternoon saying he had had 11 pints that day.

 

We had the same on Princess last year. I heard a guy getting the heads up at 11am he was 8 drinks into the 15 on the drinks package. Easy to avoid though just like the buffet scrum on most ships.   

 

Anyone who can afford a drinks package (two for a couple) on top of the cruise price can probably afford it. I'm not sure why it's pinned as a certain demographic.

Edited September 30, 2023 by doog442

[funinhounslow]

On 9/29/2023 at 9:52 PM, terrierjohn said:

 

So I tend to go by gut feel, and my gut at the moment says that cruising will be very profitable over the foreseeable future, and that despite their significant debt, knowledgeable investors will consider them a safe haven for capital growth.

These two things don’t go together, have you seen what’s happened to interest rates recently? 
 

High rates are bad for companies that are billions in debt in particular those selling a discretionary product that will be the first to get binned when household budgets are squeezed…

 

People on index linked pensions are immune from this of course but I’d imagine they aren’t buying those profitable drinks packages and excursions. 

[yorkshirephil]

4 minutes ago, funinhounslow said:

These two things don’t go together, have you seen what’s happened to interest rates recently? 
 

High rates are bad for companies that are billions in debt in particular those selling a discretionary product that will be the first to get binned when household budgets are squeezed…

 

 

That is generally the case but Carnival is slightly different as they borrowed vast amounts of money at very high rates during covid because of the massive risk at the time. However since then they have done a considerable amount of re-financing  at lower rates. They have actually shown a paper profit in the last quarter. Only time will tell as to which way the shares will go and how well Carnival will do in the future. For me they are a hold especially as we have 4 cruises currently booked with P&O and Princess.

[funinhounslow]

Oh I agree if you’ve already got them you may as well keep them. 
 

I was taking issue with the suggestion that they’re a “safe haven” rather than a risky punt.

[terrierjohn]

4 minutes ago, funinhounslow said:

Oh I agree if you’ve already got them you may as well keep them. 
 

I was taking issue with the suggestion that they’re a “safe haven” rather than a risky punt.

IMO they are not too risky, holidays are always high on the list for everyone in the West, and becoming more usual in the developing countries. Add to that the fact that the share price collapse was based on the possible bankruptcy due to the pandemic,  however the then swift recovery the world economy made will soon mean that the likes of Warren Buffet will see there are major short term profits to be made as these companies shares begin to respond to current factors rather than the now very unlikely collapse of a major cruise line.

[majortom10]

12 hours ago, doog442 said:

 

We had the same on Princess last year. I heard a guy getting the heads up at 11am he was 8 drinks into the 15 on the drinks package. Easy to avoid though just like the buffet scrum on most ships.   

 

Anyone who can afford a drinks package (two for a couple) on top of the cruise price can probably afford it. I'm not sure why it's pinned as a certain demographic.

Not necessarily P&O are advertising 14 nt cruises in April from under £700pp on Arvia. So in effect with drinks package you could get a 14mt holiday for £1200pp approx with as much as you can eat and drink at any time of the day. They aren't bothered about position of cabin or having a balcony because they spend most of day in SkyDome around the pool.

[Winifred 22]

At the moment a 100 will be around the £1000 mark. You don’t have to do too many cruises to recoup that, still have the shares and benefit from more ‘free OBC ‘ when you have covered your outlay. Who knows might in the future get dividends again. 

[funinhounslow]

21 minutes ago, terrierjohn said:

IMO they are not too risky, holidays are always high on the list for everyone in the West, and becoming more usual in the developing countries.
[…]

Warren Buffet will see there are major short term profits to be made as these companies shares begin to respond to current factors rather than the now very unlikely collapse of a major cruise line.

I would suggest rent/mortgage, household bills, food on the table are even higher on the list. Inflation running at 6%+ means cruises are pretty low on the list for a lot of people these days. 
 

Let us know when Warren Buffet buys shares in cruise lines - he’s definitely someone who uses his brain rather than his gut when making investment decisions. 

Edited October 1, 2023 by funinhounslow

[funinhounslow]

Typo

[doog442]

10 hours ago, majortom10 said:

Not necessarily P&O are advertising 14 nt cruises in April from under £700pp on Arvia. So in effect with drinks package you could get a 14mt holiday for £1200pp approx with as much as you can eat and drink at any time of the day. They aren't bothered about position of cabin or having a balcony because they spend most of day in SkyDome around the pool.

 

£1200 each used to be 2 weeks all inclusive sit round a pool in Mexico / Dominica Republic territory. 

 

Post Covid current flight prices have put and end to that so P&O are clearly taking up the slack.

 

Without doubt that's the market P&O are targeting.  

Edited October 1, 2023 by doog442

[yorkshirephil]

Carnival shares are currently on the up, 20% this week, 40% in the last month, which isn't bad to say they are not paying dividends. 

[CCFC]

They have several billion in debt to clear before the dividend comes back, could be years still.