Intrinsic value of Carnival - CCL

Previous Close

$67.00

  Intrinsic Value

$44.09

stock screener

  Rating & Target

sell

-34%

  Value-price divergence*

+396%

Previous close

$67.00

 
Intrinsic value

$44.09

 
Up/down potential

-34%

 
Rating

sell

 
Value-price divergence*

+396%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CCL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 48.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.30
  3.80
  3.92
  4.03
  4.13
  4.21
  4.29
  4.36
  4.43
  4.48
  4.54
  4.58
  4.62
  4.66
  4.69
  4.73
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
Revenue, $m
  16,389
  17,012
  17,679
  18,391
  19,149
  19,956
  20,812
  21,720
  22,682
  23,699
  24,773
  25,908
  27,106
  28,370
  29,702
  31,105
  32,584
  34,140
  35,779
  37,504
  39,318
  41,227
  43,234
  45,344
  47,563
  49,896
  52,348
  54,925
  57,632
  60,478
  63,468
Variable operating expenses, $m
 
  4,480
  4,644
  4,820
  5,006
  5,205
  5,416
  5,640
  5,876
  6,127
  6,391
  6,380
  6,675
  6,986
  7,314
  7,659
  8,024
  8,407
  8,810
  9,235
  9,682
  10,152
  10,646
  11,166
  11,712
  12,287
  12,890
  13,525
  14,192
  14,892
  15,629
Fixed operating expenses, $m
 
  9,452
  9,688
  9,930
  10,178
  10,433
  10,694
  10,961
  11,235
  11,516
  11,804
  12,099
  12,401
  12,711
  13,029
  13,355
  13,689
  14,031
  14,382
  14,741
  15,110
  15,487
  15,875
  16,271
  16,678
  17,095
  17,523
  17,961
  18,410
  18,870
  19,342
Total operating expenses, $m
  13,318
  13,932
  14,332
  14,750
  15,184
  15,638
  16,110
  16,601
  17,111
  17,643
  18,195
  18,479
  19,076
  19,697
  20,343
  21,014
  21,713
  22,438
  23,192
  23,976
  24,792
  25,639
  26,521
  27,437
  28,390
  29,382
  30,413
  31,486
  32,602
  33,762
  34,971
Operating income, $m
  3,071
  3,080
  3,347
  3,641
  3,965
  4,318
  4,703
  5,120
  5,571
  6,056
  6,578
  7,430
  8,030
  8,673
  9,359
  10,091
  10,871
  11,703
  12,587
  13,527
  14,526
  15,587
  16,713
  17,907
  19,173
  20,514
  21,935
  23,439
  25,031
  26,716
  28,497
EBITDA, $m
  4,809
  4,911
  5,238
  5,597
  5,989
  6,416
  6,878
  7,377
  7,915
  8,492
  9,112
  9,775
  10,484
  11,241
  12,047
  12,907
  13,821
  14,793
  15,826
  16,922
  18,085
  19,319
  20,626
  22,012
  23,478
  25,031
  26,673
  28,411
  30,248
  32,190
  34,242
Interest expense (income), $m
  211
  308
  329
  352
  376
  401
  428
  457
  487
  519
  554
  590
  628
  668
  710
  755
  802
  851
  904
  959
  1,016
  1,077
  1,141
  1,209
  1,279
  1,354
  1,432
  1,514
  1,601
  1,691
  1,787
Earnings before tax, $m
  2,828
  2,772
  3,017
  3,289
  3,589
  3,917
  4,275
  4,663
  5,083
  5,537
  6,025
  6,840
  7,403
  8,005
  8,649
  9,336
  10,070
  10,851
  11,683
  12,569
  13,510
  14,510
  15,572
  16,698
  17,894
  19,160
  20,503
  21,925
  23,431
  25,024
  26,711
Tax expense, $m
  49
  749
  815
  888
  969
  1,058
  1,154
  1,259
  1,373
  1,495
  1,627
  1,847
  1,999
  2,161
  2,335
  2,521
  2,719
  2,930
  3,155
  3,394
  3,648
  3,918
  4,204
  4,509
  4,831
  5,173
  5,536
  5,920
  6,326
  6,757
  7,212
Net income, $m
  2,779
  2,024
  2,203
  2,401
  2,620
  2,860
  3,121
  3,404
  3,711
  4,042
  4,398
  4,993
  5,404
  5,843
  6,313
  6,815
  7,351
  7,921
  8,529
  9,175
  9,862
  10,592
  11,367
  12,190
  13,062
  13,987
  14,967
  16,005
  17,104
  18,268
  19,499

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  603
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  38,881
  39,747
  41,305
  42,969
  44,742
  46,626
  48,627
  50,749
  52,995
  55,371
  57,882
  60,534
  63,332
  66,284
  69,396
  72,676
  76,130
  79,767
  83,596
  87,625
  91,864
  96,324
  101,013
  105,945
  111,129
  116,579
  122,308
  128,328
  134,655
  141,303
  148,289
Adjusted assets (=assets-cash), $m
  38,278
  39,747
  41,305
  42,969
  44,742
  46,626
  48,627
  50,749
  52,995
  55,371
  57,882
  60,534
  63,332
  66,284
  69,396
  72,676
  76,130
  79,767
  83,596
  87,625
  91,864
  96,324
  101,013
  105,945
  111,129
  116,579
  122,308
  128,328
  134,655
  141,303
  148,289
Revenue / Adjusted assets
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
Average production assets, $m
  17,201
  17,862
  18,563
  19,310
  20,107
  20,954
  21,853
  22,806
  23,816
  24,884
  26,012
  27,204
  28,462
  29,788
  31,187
  32,661
  34,213
  35,847
  37,568
  39,379
  41,284
  43,288
  45,395
  47,612
  49,941
  52,391
  54,965
  57,671
  60,514
  63,502
  66,641
Working capital, $m
  -5,383
  -1,701
  -1,768
  -1,839
  -1,915
  -1,996
  -2,081
  -2,172
  -2,268
  -2,370
  -2,477
  -2,591
  -2,711
  -2,837
  -2,970
  -3,111
  -3,258
  -3,414
  -3,578
  -3,750
  -3,932
  -4,123
  -4,323
  -4,534
  -4,756
  -4,990
  -5,235
  -5,492
  -5,763
  -6,048
  -6,347
Total debt, $m
  9,399
  9,411
  10,050
  10,732
  11,459
  12,232
  13,052
  13,922
  14,843
  15,817
  16,847
  17,934
  19,081
  20,292
  21,568
  22,912
  24,328
  25,820
  27,389
  29,041
  30,779
  32,608
  34,530
  36,552
  38,678
  40,913
  43,261
  45,730
  48,324
  51,049
  53,913
Total liabilities, $m
  16,284
  16,296
  16,935
  17,617
  18,344
  19,117
  19,937
  20,807
  21,728
  22,702
  23,732
  24,819
  25,966
  27,177
  28,453
  29,797
  31,213
  32,705
  34,274
  35,926
  37,664
  39,493
  41,415
  43,437
  45,563
  47,798
  50,146
  52,615
  55,209
  57,934
  60,798
Total equity, $m
  22,597
  23,451
  24,370
  25,352
  26,398
  27,510
  28,690
  29,942
  31,267
  32,669
  34,150
  35,715
  37,366
  39,108
  40,944
  42,879
  44,917
  47,063
  49,322
  51,699
  54,200
  56,831
  59,598
  62,507
  65,566
  68,782
  72,162
  75,714
  79,447
  83,369
  87,490
Total liabilities and equity, $m
  38,881
  39,747
  41,305
  42,969
  44,742
  46,627
  48,627
  50,749
  52,995
  55,371
  57,882
  60,534
  63,332
  66,285
  69,397
  72,676
  76,130
  79,768
  83,596
  87,625
  91,864
  96,324
  101,013
  105,944
  111,129
  116,580
  122,308
  128,329
  134,656
  141,303
  148,288
Debt-to-equity ratio
  0.416
  0.400
  0.410
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.480
  0.490
  0.500
  0.510
  0.520
  0.530
  0.530
  0.540
  0.550
  0.560
  0.560
  0.570
  0.570
  0.580
  0.580
  0.590
  0.590
  0.600
  0.600
  0.610
  0.610
  0.620
Adjusted equity ratio
  0.587
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,779
  2,024
  2,203
  2,401
  2,620
  2,860
  3,121
  3,404
  3,711
  4,042
  4,398
  4,993
  5,404
  5,843
  6,313
  6,815
  7,351
  7,921
  8,529
  9,175
  9,862
  10,592
  11,367
  12,190
  13,062
  13,987
  14,967
  16,005
  17,104
  18,268
  19,499
Depreciation, amort., depletion, $m
  1,738
  1,831
  1,891
  1,956
  2,024
  2,097
  2,175
  2,257
  2,344
  2,436
  2,533
  2,345
  2,454
  2,568
  2,689
  2,816
  2,949
  3,090
  3,239
  3,395
  3,559
  3,732
  3,913
  4,104
  4,305
  4,516
  4,738
  4,972
  5,217
  5,474
  5,745
Funds from operations, $m
  5,578
  3,855
  4,094
  4,357
  4,644
  4,957
  5,296
  5,661
  6,055
  6,478
  6,932
  7,339
  7,858
  8,411
  9,002
  9,631
  10,300
  11,012
  11,768
  12,570
  13,421
  14,324
  15,281
  16,294
  17,368
  18,504
  19,705
  20,977
  22,321
  23,742
  25,244
Change in working capital, $m
  444
  -62
  -67
  -71
  -76
  -81
  -86
  -91
  -96
  -102
  -107
  -114
  -120
  -126
  -133
  -140
  -148
  -156
  -164
  -172
  -181
  -191
  -201
  -211
  -222
  -233
  -245
  -258
  -271
  -285
  -299
Cash from operations, $m
  5,134
  3,917
  4,160
  4,428
  4,720
  5,038
  5,381
  5,752
  6,151
  6,580
  7,039
  7,452
  7,977
  8,538
  9,135
  9,771
  10,448
  11,167
  11,931
  12,742
  13,603
  14,515
  15,482
  16,505
  17,589
  18,737
  19,951
  21,234
  22,592
  24,027
  25,543
Maintenance CAPEX, $m
  0
  -1,483
  -1,540
  -1,600
  -1,665
  -1,733
  -1,806
  -1,884
  -1,966
  -2,053
  -2,145
  -2,242
  -2,345
  -2,454
  -2,568
  -2,689
  -2,816
  -2,949
  -3,090
  -3,239
  -3,395
  -3,559
  -3,732
  -3,913
  -4,104
  -4,305
  -4,516
  -4,738
  -4,972
  -5,217
  -5,474
New CAPEX, $m
  -3,062
  -662
  -700
  -748
  -797
  -847
  -899
  -953
  -1,009
  -1,068
  -1,128
  -1,192
  -1,258
  -1,327
  -1,399
  -1,474
  -1,552
  -1,635
  -1,721
  -1,811
  -1,905
  -2,004
  -2,108
  -2,216
  -2,330
  -2,449
  -2,574
  -2,706
  -2,843
  -2,988
  -3,139
Cash from investing activities, $m
  -3,323
  -2,145
  -2,240
  -2,348
  -2,462
  -2,580
  -2,705
  -2,837
  -2,975
  -3,121
  -3,273
  -3,434
  -3,603
  -3,781
  -3,967
  -4,163
  -4,368
  -4,584
  -4,811
  -5,050
  -5,300
  -5,563
  -5,840
  -6,129
  -6,434
  -6,754
  -7,090
  -7,444
  -7,815
  -8,205
  -8,613
Free cash flow, $m
  1,811
  1,772
  1,920
  2,080
  2,259
  2,457
  2,676
  2,915
  3,176
  3,459
  3,765
  4,018
  4,374
  4,758
  5,169
  5,609
  6,080
  6,583
  7,120
  7,693
  8,303
  8,952
  9,642
  10,376
  11,155
  11,982
  12,860
  13,790
  14,777
  15,822
  16,929
Issuance/(repayment) of debt, $m
  711
  615
  639
  682
  727
  773
  820
  870
  921
  974
  1,030
  1,087
  1,147
  1,210
  1,276
  1,345
  1,416
  1,491
  1,570
  1,652
  1,738
  1,828
  1,923
  2,022
  2,126
  2,235
  2,349
  2,468
  2,594
  2,726
  2,864
Issuance/(repurchase) of shares, $m
  -2,300
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,614
  615
  639
  682
  727
  773
  820
  870
  921
  974
  1,030
  1,087
  1,147
  1,210
  1,276
  1,345
  1,416
  1,491
  1,570
  1,652
  1,738
  1,828
  1,923
  2,022
  2,126
  2,235
  2,349
  2,468
  2,594
  2,726
  2,864
Total cash flow (excl. dividends), $m
  185
  2,388
  2,559
  2,762
  2,986
  3,230
  3,496
  3,785
  4,096
  4,433
  4,795
  5,105
  5,522
  5,968
  6,445
  6,954
  7,496
  8,075
  8,690
  9,345
  10,041
  10,780
  11,565
  12,398
  13,281
  14,217
  15,209
  16,259
  17,371
  18,548
  19,793
Retained Cash Flow (-), $m
  1,174
  -854
  -919
  -982
  -1,046
  -1,112
  -1,181
  -1,252
  -1,325
  -1,402
  -1,482
  -1,565
  -1,651
  -1,742
  -1,836
  -1,935
  -2,038
  -2,146
  -2,259
  -2,377
  -2,501
  -2,631
  -2,767
  -2,909
  -3,059
  -3,216
  -3,380
  -3,552
  -3,733
  -3,922
  -4,121
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,534
  1,640
  1,781
  1,940
  2,118
  2,315
  2,533
  2,771
  3,031
  3,313
  3,541
  3,871
  4,226
  4,609
  5,019
  5,458
  5,929
  6,431
  6,968
  7,540
  8,149
  8,798
  9,488
  10,222
  11,001
  11,829
  12,707
  13,638
  14,625
  15,672
Discount rate, %
 
  4.70
  4.94
  5.18
  5.44
  5.71
  6.00
  6.30
  6.61
  6.94
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.77
  11.31
  11.88
  12.47
  13.09
  13.75
  14.44
  15.16
  15.92
  16.71
  17.55
  18.42
  19.35
PV of cash for distribution, $m
 
  1,465
  1,489
  1,530
  1,569
  1,604
  1,632
  1,652
  1,660
  1,657
  1,639
  1,573
  1,530
  1,474
  1,404
  1,321
  1,228
  1,127
  1,020
  910
  799
  691
  587
  490
  402
  323
  254
  196
  148
  108
  78
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Carnival Corporation operates as a leisure travel and cruise company. It offers cruises under the Carnival Cruise Line, Princess Cruises, Holland America Line, and Seabourn brands in North America; and Costa, AIDA, P&O Cruises (UK), Cunard, and P&O Cruises (Australia) brands in Europe, Australia, and Asia. The company operates approximately 100 cruise ships. It also owns Holland America Princess Alaska Tours, a tour company in Alaska and the Canadian Yukon, which owns and operates hotels, lodges, glass-domed railcars, and motor coaches. In addition, the company is involved in the leasing of cruise ships. It sells its cruises primarily through travel agents and tour operators. The company was incorporated in 1972 and is headquartered in Miami, Florida. Carnival Corporation is a subsidiary of Carnival Corporation & Plc.

FINANCIAL RATIOS  of  Carnival (CCL)

Valuation Ratios
P/E Ratio 17.5
Price to Sales 3
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 9.5
Price to Free Cash Flow 23.5
Growth Rates
Sales Growth Rate 4.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 33.5%
Cap. Spend. - 3 Yr. Gr. Rate 7.3%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 36.7%
Total Debt to Equity 41.6%
Interest Coverage 14
Management Effectiveness
Return On Assets 7.6%
Ret/ On Assets - 3 Yr. Avg. 5.5%
Return On Total Capital 8.6%
Ret/ On T. Cap. - 3 Yr. Avg. 5.9%
Return On Equity 12%
Return On Equity - 3 Yr. Avg. 8.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 42.7%
Gross Margin - 3 Yr. Avg. 39%
EBITDA Margin 29.1%
EBITDA Margin - 3 Yr. Avg. 24.1%
Operating Margin 18.7%
Oper. Margin - 3 Yr. Avg. 15.4%
Pre-Tax Margin 17.3%
Pre-Tax Margin - 3 Yr. Avg. 12.1%
Net Profit Margin 17%
Net Profit Margin - 3 Yr. Avg. 11.9%
Effective Tax Rate 1.7%
Eff/ Tax Rate - 3 Yr. Avg. 1.6%
Payout Ratio 35.2%

CCL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CCL stock intrinsic value calculation we used $16389 million for the last fiscal year's total revenue generated by Carnival. The default revenue input number comes from 2016 income statement of Carnival. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CCL stock valuation model: a) initial revenue growth rate of 3.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.7%, whose default value for CCL is calculated based on our internal credit rating of Carnival, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Carnival.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CCL stock the variable cost ratio is equal to 26.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9221 million in the base year in the intrinsic value calculation for CCL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Carnival.

Corporate tax rate of 27% is the nominal tax rate for Carnival. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CCL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CCL are equal to 105%.

Life of production assets of 11.6 years is the average useful life of capital assets used in Carnival operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CCL is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $22597 million for Carnival - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 719.292 million for Carnival is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Carnival at the current share price and the inputted number of shares is $48.2 billion.

RELATED COMPANIES Price Int.Val. Rating
NCLH Norwegian Crui 55.07 17.52  str.sell
RCL Royal Caribbea 114.91 11.61  str.sell
CUK Carnival ADR 67.21 29.76  str.sell

COMPANY NEWS

▶ The dark side of cruises   [12:34PM  MarketWatch]
▶ Royal Caribbean Whips Carnival and Norwegian in This Area   [Jul-21-17 05:45PM  TheStreet.com]
▶ Cruise Line Earnings: Full Steam Ahead!   [01:12PM  Barrons.com]
▶ Cunard Offers 'Drinks on Us'   [10:07AM  PR Newswire]
▶ Cunard Receives Travel + Leisure 2017 World's Best Award   [Jul-11-17 12:00PM  PR Newswire]
▶ Carnival kicks off Tampa to Havana cruise with a celebration of culture (Video)   [Jun-30-17 11:41AM  American City Business Journals]
▶ Carnival Stock Earns Its All-Time Highs Again   [Jun-29-17 09:04AM  Motley Fool]
▶ What Southwest's cutback of Cuba flights means for Tampa route   [07:54AM  American City Business Journals]
▶ New Trump rules on Cuba travel leaves winners and losers   [Jun-27-17 06:42PM  Associated Press]
▶ The 2 Best Dividend Stocks in Cruise Lines   [Jun-26-17 04:55PM  Motley Fool]
▶ Carnival posts 2Q profit   [Jun-22-17 07:26PM  Associated Press]
▶ Carnival beats Street 2Q forecasts   [07:26PM  Associated Press]
▶ Smooth sailing for cruise industry   [02:25PM  CNBC Videos]
▶ Cramer's Stop Trading: Carnival   [09:55AM  CNBC Videos]
▶ Carnival beats Street 2Q forecasts   [09:23AM  Associated Press]
▶ 5 Must-See Earnings Charts   [Jun-21-17 04:19PM  Zacks]
▶ Story Stocks from Briefing.com   [11:46AM  Briefing.com]
▶ Rep. Castor joins Bay area businesspeople in speaking out against new policy on Cuba   [Jun-16-17 06:15PM  American City Business Journals]
▶ Trump's Cuba policy will put damper on some U.S. business   [03:15PM  American City Business Journals]
▶ Vacation stocks a buy? 4 trades   [Jun-02-17 05:00PM  CNBC Videos]
▶ Cramer: This red-hot sector may cruise higher   [May-31-17 06:50PM  CNBC Videos]
▶ Princess Cruises Debuts 2018-2019 Exotics Sailings   [May-25-17 05:31PM  PR Newswire]
▶ Princess Cruises Announces 2018-2019 Americas Season   [May-22-17 08:45PM  PR Newswire]
▶ 2 Top Cruise Line Stocks to Buy in 2017   [May-20-17 03:00PM  Motley Fool]
Stock chart of CCL Financial statements of CCL Annual reports of CCL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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