Carnival: Why I'm Doubling Down Despite Unhedged Fuel Risk

Dilantha De Silva13.01K FollowersFollow5ShareSavePlay(12min)CommentsSummaryCarnival (CCL) stock has declined ~25% since Iran tensions began earlier this month.More than a demand decline, investors should monitor how Carnival's blended average fuel cost will notably increase if tensions persist.In this analysis, I quantify the impact of higher fuel prices on Carnival's adjusted net income in 2026. In my base-case scenario, I model a 20% increase in fuel cost.Although adjusted net income is almost certain to come lower than management's guidance for this year if tensions persist, I believe there are 3 reasons to be contrarian today. Alexander Shapovalov/iStock Editorial via Getty Images Carnival Corporation (CCL) stock has been in freefall since the U.S. and Israel attacked Iran a couple of weeks ago. From around $32, the stock has fallen to less than $24 as of this writing, representing a sharpThis article was written byDilantha De Silva13.01K FollowersFollowDilantha De Silva is an experienced equity analyst and investment researcher with over 10 years in the investment industry. He writes insightful articles for Seeking Alpha, GuruFocus, TipRanks, and ValueWalk, with a significant following on Seeking Alpha. Dilantha’s expertise spans across various sectors, with a particular focus on small-cap stocks that are overlooked by Wall Street analysts. He is a CFA Level III candidate and holds qualifications from the Chartered Institute for Securities and Investment (CISI). Dilantha has been featured on CNBC and Bloomberg, and his work has been prominently showcased on Nasdaq, Yahoo Finance, and other leading investment platforms. When not analyzing stocks and writing, Dilantha is involved in private equity transactions, including acquiring and managing businesses.Analyst’s Disclosure: I/we have a beneficial long position in the shares of CCL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.