Carnival (CCL) £43.95

Loss to date: 12.5%

Original entry price: Buy at £50.33, 19 October 2017

Shares in cruise operator Carnival (CCL) are under pressure after its forecast earnings per share (EPS) has fallen to reflect higher fuel prices and the stronger US dollar.

Over the last year, the price of Brent Crude oil has soared 66.4% to approximately $75 per barrel, representing a significant headwind and driving costs higher for Carnival.

The cruise operator expects EPS to hit $4.15 to $4.25 in the year to 30 November, which is lower than the previously anticipated range of $4.20 to $4.40.

Shares in Carnival suffered approximately a 10% drop as investors overlooked 4.8% net revenue yield growth, beating guidance given in March for growth of between 2.5% and 3.5%.

Shore Capital’s Greg Johnson argues a key part of Carnival’s appeal is revenue yield growth, flagging over 5% was added in 2019 and 2020 ahead of anticipated industry capacity growth.

Johnson questions whether Carnival can deliver sales growth of 2% per year amid this capacity growth, but is encouraged that cumulative bookings for 2019 are ‘slightly ahead and at higher prices.’

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