USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com.
Q: When will issues with Carnival start to hurt the stock?
A: Carnival (CCL) has been hit by a wave of unfortunate events, but its stock has held up surprisingly well.
The cruise ship operator in January 2012 suffered a public relations nightmare when its Costa Concordia ship hit a rock off the coast near Isola del Giglio in Italy and tipped over; 32 people died.
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More recently, in February 2013, the company's Carnival Triumph had an engine fire, leaving it stranded in the Gulf of Mexico before it was towed to Mobile, Ala.
Those problems haven't been isolated. In mid-March, the Carnival Legend cruise ship reported having problems with a propulsion unit.
After that, investors learned the Carnival Dream ship suffered a technical problem that resulted in passengers being flown home early.
The headlines Carnival is getting lately aren't flattering, but so far, investors don't seem ready to jump in the lifeboats.
All these problems don't seem to be hurting Carnival stock much. Shares of the company are up more than 6% in the past year and down 8% in 2013.
Carnival is missing the year's rally, but it's not the catastrophe some might have expected.
The mishaps and catastrophes will certainly give potential new customers reasons to vacation elsewhere, says a Credit Suisse report, a big reason Credit Suisse cut its 2013 expected earnings by 3.7%.
Carnival, too, said that bookings for 2013 are coming in behind where they were a year ago.
But the effects will be short term, based on the Credit Suisse estimate. The brokerage only cut its 2014 earnings estimate for the company by 1 cent a share to $2.98.
Brokerage Stifel Nicolaus thinks the spate of negative news is just a coincidence of bad luck and is creating an interesting situation with the stock.
Source: http://www.news.theusalinks.com/2013/03/25/carnivals-stock-may-ride-out-rough-seas/
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