Cruise stock investors are monitoring Hurricane Irma and Hurricane Jose closely to determine just how much of an impact the two storms could have on revenues and profits. A handful of cruises have already been canceled during what is typically one of the busiest times of the year in the cruise industry.
As of Saturday, Carnival Corp. (NYSE: CCL) had already canceled at least five cruises and issued full refunds to customers. Carnival has also shortened and delayed at least seven other cruises and issued pro-rated refunds.
[See: The Best Cruise Lines for the Money.]
Royal Caribbean International ( RCL) has canceled at least three cruises. In addition to a full refund, impacted customers received a 25 percent credit for a future cruise.
Norwegian Cruise Line Holdings ( NCLH) canceled at three cruises and is providing a full refund and a 50 percent credit on a future cruise.
Walt Disney Co. ( DIS) canceled at least three cruises and issued customers a 25 percent discount on a future cruise.
Unfortunately for cruise stock investors, more cancellations could be on the way.
“To the extent they have to close the Port of Miami or Port Everglades in Fort Lauderdale, that could be a pretty big deal,” Wedbush Securities analyst James Hardiman said last week, according to CBS News. “Those are the biggest cruise ports in the United States.”
All together, the Caribbean and Bahamas region accounts for more than $3 billion in cruise revenue per year, according to the Caribbean Cruise Association.
On top of the cruise cancellations, Disney’s four Florida theme parks closed Sunday and Monday. As of Friday, Loop Capital analyst David Miller said two days of closures is a bit optimistic for Disney.
[See: 4 Tips for a Disney World Vacation on a Budget.]
“We are assuming for sake of this exercise that the effects of Hurricane Irma will shut DIS’ Orlando operations down for at least four days,” Miller wrote on Friday. “We are also assuming that one-half of DIS’ cruise operations will become inoperable over the next five days, including yesterday.”
In the past five trading sessions, shares of the four cruise stocks are each down between 4 and 8 percent.
Experts are still in the early stages of assessing the full impact of Irma. One of the only silver linings for investors at this point is that all four cruise stocks are already priced at a discount to the broad market based on future earnings expectations. All four stocks currently have forward price-earnings ratios below 15.
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Hurricanes Leave Cruise Industry in Limbo originally appeared on usnews.com
