Q4 Preview: Carnival (CCL) Guidance to Grab Investors Focus; Fuel Prices are Main Catalyst

Carnival Corp. (NYSE: CCL) stock is lower ahead of its fourth-quarter 2011 performance report, trading about 3.5 percent in negative territory late Monday.

Ahead of the bell Tuesday, Carnival is expected to report earnings of 28 cents per share on revenue of $3.79 billion. Earnings would be a 15 percent decline from the same period last year.

Shares of Carnival gained just 1.3 percent in the quarter, to $33.20 at the end of November. The stock is down about 1.5 percent since then, and off 27 percent in 2011.

Last quarter, Carnival reporting having cash of $0.55 and a book value of $31.65 per share. Shares are trading for 11.6 times next years earnings estimates, excluding cash.

Data from Bloomberg has 19 analysts with a Buy rating on Carnival, 2 at Hold, and none with a Sell rating. The analyst price target average is $41.50, with a low of $38 and high of $46. Carnival has traded between $28.52 and $48.14 over the last 52-week period, and the analyst price target average suggests 27 percent of upside.

Analyst Comments

• Goldman Sachs is modeling earnings of 28 cents per share. Goldman sees investor focus on fiscal 2012 guidance and commentary. Looking to FY12, Goldman sees earnings of $2.87 per share, forecasting fuel prices of $707 per metric ton, versus $671 prior. The estimate still has Carnival growing 17.5 percent year-over-year.
  
  Commenting on its outlook, Goldman said, "Importantly, we think the components of our full year 2012E assumptions are conservative as we forecast net yield growth of 1.7% (on a current basis), net cruise costs (ex-fuel) declining only 1.2%, and fuel costs rising 11%. We also expect CCL to provide 1Q2012 guidance. We forecast EPS of $0.14 and expect net yield growth of 1.5% (on a current basis) for 1Q2012."
  
  
• Deutsche Bank also believes 2012 guidance will be the focus. DB is currently modeling earnings of $2.65, compared with the consensus of $2.81. Deutsche argues that the main reason for the discrepancy in its forecast is that the Street is looking for fuel prices of $660 per metric ton, compared with their outlook calling for $680 per metric ton.
  
  Further, in 2012, Deutsche thinks "the trading environment for US brands should be relatively healthy although Europe including the UK will be slightly softer as shown by some recent trading data from European tour operators."

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Carnival's past performance at Streetinsider's Carnival's Income Statement.

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