The stock market was squarely lower on Thursday afternoon, with all the major indices suffering losses. The impeachment inquiry continued to play out in the background, as did the U.S.-China trade war.
Data source: Yahoo! Finance.
A combination of a weak market and disappointing guidance led investors to punish shares of Carnival Corp. (NYSE:CCL) and FactSet Research Systems (NYSE:FDS). Here’s what happened.
Carnival warns about sluggish booking trends
Shares of cruise-ship operator Carnival have been in a funk since the beginning of 2018, and the company’s third-quarter report did nothing to change that. While Carnival reported solid revenue growth and easily beat analyst estimates across the board, a warning about booking trends for 2020 was not well received. The stock was down about 8.7% at 1:30 p.m. EDT.
While cumulative advanced bookings for the first half of 2020 are ahead of the prior-year’s pace, the company has experienced lower-than-expected booking volumes and prices since June. Given the uncertainty created by trade tensions and recession fears, it’s not surprising that consumers are holding off on booking cruises.
Image source: Carnival.
For the fourth quarter of this year, Carnival expects to produce sharply lower profits. The company sees adjusted earnings per share between $0.46 and $0.50, down from $0.70 in the prior-year period. Weather disruptions, a ship delivery delay, and a U.S. policy change on travel to Cuba will all weigh on the bottom line.
“As a truly global cruise company, with nearly 50 percent of our guests sourced outside of the U.S., we are facing a number of current headwinds, including weakening economies affecting our Europe and Asia segment, a strong dollar and of course, the IMO 2020 regulations, and we are working to mitigate them,” said Carnival CEO Arnold Donald.
Those headwinds were enough on Thursday for investors to push down the stock.
FactSet Research disappoints investors
Like Carnival, financial data and software provider FactSet Research put up solid quarterly numbers but whiffed on guidance. FactSet’s fiscal fourth-quarter results came in ahead of analyst estimates, but the company’s outlook for fiscal 2020 left a lot to be desired. The stock was down 11.3% at 1:30 p.m. EDT.
FactSet produced revenue of $364.3 million and adjusted earnings per share (EPS) of $2.61 in the fourth quarter, up 5.3% and 18.6%, respectively. The content and technology solutions segment and the wealth segment were star performers, with annual subscription value rising 15% and 9.6%, respectively.
While fiscal 2019 was a good year for the company, fiscal 2020 is looking a little less rosy. FactSet expects to generate revenue between $1.49 billion and $1.50 billion, up just 4.2% and below the consensus analyst estimate of $1.51 billion. Adjusted EPS is expected between $9.85 and $10.15, flat from fiscal 2019 and well below analyst expectations of $10.51.
With earnings growth set to grind to a halt, a price-to-earnings ratio in the high 20s has become difficult for investors to justify.