By Callum Keown
Cruise stocks have been in choppy waters recently, but Carnival earnings on Friday will help investors navigate the near-term course -- for better or worse.
As Carnival's fiscal fourth quarter ends in November, a month earlier than Royal Caribbean and Norwegian Cruise Line, the company's earnings just before the open will be closely watched for an up-to-date picture of the cruise industry.
Investors could do with the clarity -- the big three cruise operators have all fallen roughly 2% to 12% since the beginning of October amid concerns about oversupply in the Caribbean, though they are all up sharply this month.
"Flat out nervous. That would be the best phrase we can use to describe how we feel heading into Carnival's first crack at fiscal year 2026 guidance," Stifel research analyst Steven Wieczynski said in a note last week. "It would not surprise us to see initial FY26 guidance underwhelm expectations," he added.
Wall Street is looking for earnings per share of $2.44 in 2026, or 19 cents in the first quarter. For the fiscal fourth quarter, analysts are expecting EPS of 24 cents on sales of $6.4 billion.
Beyond the numbers, the Caribbean is the obvious area of concern and one that investors will be keen for an update on. Goldman Sachs analysts downgraded Norwegian Cruise Line Holdings to Neutral from Buy last week, citing the company's exposure to the Caribbean market. They kept a Buy rating on Royal Caribbean but warned of "near-term weakness" ahead.
The bank's analysts, led by Lizzie Dove, said Carnival appears to be the least affected of the big three by the pressure in the Caribbean, citing its reduced exposure to the region. They have a Buy rating on the stock but said they expected the company's initial 2026 guidance to come in below expectations.
That's one of three reasons they expect volatility in cruise stocks over the short term, along with negative promotional checks and pressure on net yields.
"Given the concern around the competitive dynamic in the Caribbean, Carnival's initial net yield view will likely be highly scrutinized," Melius Research analyst Conor Cunningham said. "As always we expect a conservative initial view from Carnival with close-in demand and onboard spending being swing factors on how the quarter unfolds," he added.
The tide can quickly turn on cruise stocks -- as it has done in recent months. Carnival stock has fallen roughly 2% since the start of October but is up so far in December. For Royal Caribbean, it's down about 11% since the start of the quarter but up roughly 8% so far this month, as of Thursday's close.
Norwegian has been the most volatile, surging 17% in December but still down about 12% since the beginning of October. The stock is down roughly 16% in 2025, while its two rivals are up by double digits, as of Thursday's close.
Whatever happens after Carnival earnings drop, it's unlikely to be smooth sailing.
Write to Callum Keown at callum.keown@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 18, 2025 16:40 ET (21:40 GMT)
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