A near doubling of second quarter earnings per share and a bullish outlook statement send shares in cruise giant Carnival (CCL) up 4.3% to £34.03.

The £7 billion cap, one of the few travel and leisure stocks to sound confident after the Brexit vote, is forecasting over 20% earnings growth this year and is approaching a 9% return on invested capital.

It expects adjusted earnings per share to be in the range of $3.25 to $3.35 for the year ending November 2016, compared with its previous guidance of $3.20 to $3.40. This is despite recent currency movements and rises in fuel prices.

CCL - Comparison Line Chart (Rebased to first)

Carnival had a strong second quarter, with net revenue yields rising 3.6% in constant currency – better than its March prediction of a 1.5% increase. Cruise costs excluding fuel per available lower berth day fell by 1.9%.

This helped diluted earnings per share increase by an impressive 96% to $0.49.

The positive trading statement follows Carnival’s decision in April to hike its dividend by 17% to $0.35 per share after revealing its net cash flow would reach $4.5 billion this year.

We’ve been fans of the stock for some time because of its increasing exposure to the fast-growing Chinese market and track-record of producing forecast-beating results.

UBS’s £38.50 target price implies 13% upside.

Issue Date: 28 Jun 2016