Intrinsic value of Carnival ADR - CUK

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$66.33

  Intrinsic Value

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  Value-price divergence*

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$66.33

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

We calculate the intrinsic value of CUK 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 48.6

 

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
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
  5.25
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
Revenue, $m
  16,389
  17,372
  18,397
  19,466
  20,581
  21,746
  22,961
  24,231
  25,559
  26,947
  28,398
  29,917
  31,507
  33,171
  34,914
  36,740
  38,653
  40,657
  42,757
  44,960
  47,268
  49,689
  52,228
  54,891
  57,684
  60,614
  63,688
  66,914
  70,299
  73,850
  77,578
Variable operating expenses, $m
 
  4,569
  4,821
  5,084
  5,359
  5,646
  5,945
  6,258
  6,585
  6,926
  7,284
  7,367
  7,758
  8,168
  8,597
  9,047
  9,518
  10,012
  10,529
  11,071
  11,640
  12,236
  12,861
  13,517
  14,204
  14,926
  15,683
  16,477
  17,311
  18,185
  19,103
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
  14,021
  14,509
  15,014
  15,537
  16,079
  16,639
  17,219
  17,820
  18,442
  19,088
  19,466
  20,159
  20,879
  21,626
  22,402
  23,207
  24,043
  24,911
  25,812
  26,750
  27,723
  28,736
  29,788
  30,882
  32,021
  33,206
  34,438
  35,721
  37,055
  38,445
Operating income, $m
  3,071
  3,352
  3,888
  4,452
  5,044
  5,667
  6,323
  7,013
  7,739
  8,504
  9,311
  10,452
  11,347
  12,292
  13,288
  14,338
  15,446
  16,614
  17,847
  19,147
  20,519
  21,966
  23,493
  25,103
  26,801
  28,593
  30,483
  32,476
  34,578
  36,795
  39,133
EBITDA, $m
  4,809
  5,338
  5,974
  6,642
  7,343
  8,080
  8,854
  9,668
  10,524
  11,424
  12,372
  13,370
  14,421
  15,528
  16,694
  17,923
  19,217
  20,581
  22,019
  23,534
  25,131
  26,814
  28,588
  30,458
  32,429
  34,507
  36,696
  39,004
  41,437
  44,000
  46,701
Interest expense (income), $m
  0
  310
  343
  377
  413
  451
  490
  531
  573
  618
  665
  713
  765
  818
  874
  932
  994
  1,058
  1,125
  1,196
  1,270
  1,348
  1,429
  1,514
  1,604
  1,698
  1,796
  1,900
  2,008
  2,122
  2,241
Earnings before tax, $m
  2,828
  3,042
  3,545
  4,074
  4,631
  5,216
  5,833
  6,482
  7,166
  7,886
  8,646
  9,738
  10,583
  11,474
  12,414
  13,406
  14,452
  15,556
  16,722
  17,951
  19,249
  20,618
  22,063
  23,588
  25,197
  26,895
  28,687
  30,577
  32,570
  34,673
  36,892
Tax expense, $m
  49
  821
  957
  1,100
  1,250
  1,408
  1,575
  1,750
  1,935
  2,129
  2,334
  2,629
  2,857
  3,098
  3,352
  3,620
  3,902
  4,200
  4,515
  4,847
  5,197
  5,567
  5,957
  6,369
  6,803
  7,262
  7,745
  8,256
  8,794
  9,362
  9,961
Net income, $m
  2,779
  2,221
  2,588
  2,974
  3,380
  3,808
  4,258
  4,732
  5,231
  5,757
  6,312
  7,109
  7,726
  8,376
  9,062
  9,786
  10,550
  11,356
  12,207
  13,104
  14,052
  15,051
  16,106
  17,220
  18,394
  19,634
  20,941
  22,321
  23,776
  25,312
  26,931

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
  38,936
  40,590
  42,984
  45,482
  48,087
  50,807
  53,648
  56,615
  59,717
  62,960
  66,351
  69,900
  73,615
  77,503
  81,576
  85,841
  90,310
  94,993
  99,901
  105,046
  110,440
  116,096
  122,028
  128,250
  134,776
  141,622
  148,805
  156,341
  164,249
  172,547
  181,256
Adjusted assets (=assets-cash), $m
  38,333
  40,590
  42,984
  45,482
  48,087
  50,807
  53,648
  56,615
  59,717
  62,960
  66,351
  69,900
  73,615
  77,503
  81,576
  85,841
  90,310
  94,993
  99,901
  105,046
  110,440
  116,096
  122,028
  128,250
  134,776
  141,622
  148,805
  156,341
  164,249
  172,547
  181,256
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
  33,415
  35,422
  37,512
  39,692
  41,965
  44,339
  46,818
  49,408
  52,114
  54,944
  57,904
  61,002
  64,243
  67,637
  71,190
  74,913
  78,813
  82,899
  87,183
  91,673
  96,380
  101,316
  106,493
  111,922
  117,618
  123,592
  129,861
  136,438
  143,339
  150,581
  158,181
Working capital, $m
  -5,383
  -5,177
  -5,482
  -5,801
  -6,133
  -6,480
  -6,842
  -7,221
  -7,617
  -8,030
  -8,463
  -8,915
  -9,389
  -9,885
  -10,404
  -10,949
  -11,518
  -12,116
  -12,742
  -13,398
  -14,086
  -14,807
  -15,564
  -16,357
  -17,190
  -18,063
  -18,979
  -19,940
  -20,949
  -22,007
  -23,118
Total debt, $m
  9,454
  9,797
  10,782
  11,808
  12,879
  13,997
  15,164
  16,384
  17,659
  18,991
  20,385
  21,844
  23,371
  24,969
  26,643
  28,396
  30,232
  32,157
  34,174
  36,289
  38,506
  40,831
  43,268
  45,826
  48,508
  51,322
  54,274
  57,371
  60,621
  64,032
  67,611
Total liabilities, $m
  16,339
  16,682
  17,667
  18,693
  19,764
  20,882
  22,049
  23,269
  24,544
  25,876
  27,270
  28,729
  30,256
  31,854
  33,528
  35,281
  37,117
  39,042
  41,059
  43,174
  45,391
  47,716
  50,153
  52,711
  55,393
  58,207
  61,159
  64,256
  67,506
  70,917
  74,496
Total equity, $m
  22,597
  23,907
  25,318
  26,789
  28,323
  29,925
  31,598
  33,346
  35,173
  37,083
  39,081
  41,171
  43,359
  45,650
  48,048
  50,560
  53,192
  55,951
  58,842
  61,872
  65,049
  68,381
  71,874
  75,539
  79,383
  83,415
  87,646
  92,085
  96,743
  101,630
  106,760
Total liabilities and equity, $m
  38,936
  40,589
  42,985
  45,482
  48,087
  50,807
  53,647
  56,615
  59,717
  62,959
  66,351
  69,900
  73,615
  77,504
  81,576
  85,841
  90,309
  94,993
  99,901
  105,046
  110,440
  116,097
  122,027
  128,250
  134,776
  141,622
  148,805
  156,341
  164,249
  172,547
  181,256
Debt-to-equity ratio
  0.418
  0.410
  0.430
  0.440
  0.450
  0.470
  0.480
  0.490
  0.500
  0.510
  0.520
  0.530
  0.540
  0.550
  0.550
  0.560
  0.570
  0.570
  0.580
  0.590
  0.590
  0.600
  0.600
  0.610
  0.610
  0.620
  0.620
  0.620
  0.630
  0.630
  0.630
Adjusted equity ratio
  0.586
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589
  0.589

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,779
  2,221
  2,588
  2,974
  3,380
  3,808
  4,258
  4,732
  5,231
  5,757
  6,312
  7,109
  7,726
  8,376
  9,062
  9,786
  10,550
  11,356
  12,207
  13,104
  14,052
  15,051
  16,106
  17,220
  18,394
  19,634
  20,941
  22,321
  23,776
  25,312
  26,931
Depreciation, amort., depletion, $m
  1,738
  1,986
  2,086
  2,190
  2,299
  2,412
  2,531
  2,655
  2,785
  2,920
  3,062
  2,919
  3,074
  3,236
  3,406
  3,584
  3,771
  3,966
  4,171
  4,386
  4,611
  4,848
  5,095
  5,355
  5,628
  5,914
  6,213
  6,528
  6,858
  7,205
  7,568
Funds from operations, $m
  5,578
  4,207
  4,674
  5,164
  5,679
  6,220
  6,789
  7,387
  8,015
  8,677
  9,373
  10,028
  10,799
  11,612
  12,468
  13,371
  14,321
  15,323
  16,378
  17,491
  18,663
  19,899
  21,202
  22,575
  24,022
  25,547
  27,155
  28,849
  30,635
  32,516
  34,499
Change in working capital, $m
  444
  -293
  -305
  -319
  -332
  -347
  -362
  -378
  -396
  -414
  -433
  -453
  -474
  -496
  -519
  -544
  -570
  -597
  -626
  -656
  -688
  -721
  -757
  -794
  -832
  -873
  -916
  -961
  -1,009
  -1,058
  -1,111
Cash from operations, $m
  5,134
  4,789
  4,979
  5,483
  6,012
  6,567
  7,151
  7,765
  8,411
  9,091
  9,806
  10,480
  11,273
  12,108
  12,988
  13,915
  14,891
  15,920
  17,004
  18,147
  19,351
  20,620
  21,958
  23,368
  24,854
  26,420
  28,071
  29,810
  31,643
  33,575
  35,610
Maintenance CAPEX, $m
  0
  -1,599
  -1,695
  -1,795
  -1,899
  -2,008
  -2,121
  -2,240
  -2,364
  -2,494
  -2,629
  -2,771
  -2,919
  -3,074
  -3,236
  -3,406
  -3,584
  -3,771
  -3,966
  -4,171
  -4,386
  -4,611
  -4,848
  -5,095
  -5,355
  -5,628
  -5,914
  -6,213
  -6,528
  -6,858
  -7,205
New CAPEX, $m
  -3,062
  -2,007
  -2,090
  -2,179
  -2,274
  -2,374
  -2,479
  -2,590
  -2,707
  -2,830
  -2,960
  -3,097
  -3,242
  -3,394
  -3,554
  -3,722
  -3,900
  -4,087
  -4,283
  -4,490
  -4,707
  -4,936
  -5,177
  -5,430
  -5,695
  -5,975
  -6,268
  -6,577
  -6,901
  -7,242
  -7,600
Cash from investing activities, $m
  -3,323
  -3,606
  -3,785
  -3,974
  -4,173
  -4,382
  -4,600
  -4,830
  -5,071
  -5,324
  -5,589
  -5,868
  -6,161
  -6,468
  -6,790
  -7,128
  -7,484
  -7,858
  -8,249
  -8,661
  -9,093
  -9,547
  -10,025
  -10,525
  -11,050
  -11,603
  -12,182
  -12,790
  -13,429
  -14,100
  -14,805
Free cash flow, $m
  1,811
  1,183
  1,195
  1,509
  1,839
  2,186
  2,551
  2,935
  3,340
  3,767
  4,217
  4,613
  5,113
  5,641
  6,198
  6,786
  7,407
  8,062
  8,754
  9,485
  10,257
  11,073
  11,934
  12,843
  13,804
  14,818
  15,889
  17,020
  18,214
  19,475
  20,805
Issuance/(repayment) of debt, $m
  711
  946
  984
  1,026
  1,071
  1,118
  1,167
  1,220
  1,275
  1,333
  1,394
  1,459
  1,527
  1,598
  1,674
  1,753
  1,837
  1,925
  2,017
  2,115
  2,217
  2,325
  2,438
  2,557
  2,682
  2,814
  2,952
  3,097
  3,250
  3,411
  3,579
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
  946
  984
  1,026
  1,071
  1,118
  1,167
  1,220
  1,275
  1,333
  1,394
  1,459
  1,527
  1,598
  1,674
  1,753
  1,837
  1,925
  2,017
  2,115
  2,217
  2,325
  2,438
  2,557
  2,682
  2,814
  2,952
  3,097
  3,250
  3,411
  3,579
Total cash flow (excl. dividends), $m
  185
  2,129
  2,179
  2,535
  2,910
  3,304
  3,718
  4,155
  4,615
  5,100
  5,611
  6,071
  6,639
  7,239
  7,872
  8,539
  9,243
  9,987
  10,772
  11,600
  12,475
  13,398
  14,372
  15,400
  16,486
  17,632
  18,841
  20,117
  21,464
  22,885
  24,385
Retained Cash Flow (-), $m
  1,174
  -1,310
  -1,411
  -1,471
  -1,535
  -1,602
  -1,673
  -1,748
  -1,827
  -1,910
  -1,998
  -2,090
  -2,188
  -2,290
  -2,399
  -2,512
  -2,632
  -2,758
  -2,891
  -3,030
  -3,177
  -3,332
  -3,494
  -3,665
  -3,844
  -4,032
  -4,231
  -4,439
  -4,658
  -4,888
  -5,129
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
 
  819
  768
  1,064
  1,375
  1,702
  2,045
  2,407
  2,788
  3,190
  3,613
  3,981
  4,452
  4,949
  5,473
  6,027
  6,611
  7,229
  7,881
  8,570
  9,297
  10,066
  10,878
  11,736
  12,642
  13,599
  14,610
  15,678
  16,806
  17,997
  19,255
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
 
  782
  698
  914
  1,112
  1,289
  1,442
  1,570
  1,670
  1,743
  1,787
  1,768
  1,760
  1,726
  1,667
  1,586
  1,488
  1,374
  1,250
  1,119
  985
  853
  726
  606
  497
  399
  314
  242
  182
  133
  96
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 plc operates as a leisure travel and cruise company in North America, Europe, Australia, and Asia. 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 founded in 1850 and is headquartered in Southampton, the United Kingdom. Carnival plc is a subsidiary of Carnival Corporation & Plc.

FINANCIAL RATIOS  of  Carnival ADR (CUK)

Valuation Ratios
P/E Ratio 17.3
Price to Sales 2.9
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 9.4
Price to Free Cash Flow 23.2
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 37%
Total Debt to Equity 41.8%
Interest Coverage 0
Management Effectiveness
Return On Assets 7.1%
Ret/ On Assets - 3 Yr. Avg. 5.1%
Return On Total Capital 8.6%
Ret/ On T. Cap. - 3 Yr. Avg. 5.8%
Return On Equity 12%
Return On Equity - 3 Yr. Avg. 8.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 54.9%
Gross Margin - 3 Yr. Avg. 51.1%
EBITDA Margin 27.9%
EBITDA Margin - 3 Yr. Avg. 23.2%
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%

CUK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CUK stock intrinsic value calculation we used $16389 million for the last fiscal year's total revenue generated by Carnival ADR. The default revenue input number comes from 2016 income statement of Carnival ADR. 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 CUK stock valuation model: a) initial revenue growth rate of 6% 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 CUK is calculated based on our internal credit rating of Carnival ADR, 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 ADR.
    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 CUK 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 CUK 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 ADR.

Corporate tax rate of 27% is the nominal tax rate for Carnival ADR. 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 CUK 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 CUK are equal to 203.9%.

Life of production assets of 20.9 years is the average useful life of capital assets used in Carnival ADR 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 CUK is equal to -29.8%. 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 ADR - 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 732.984 million for Carnival ADR 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 ADR at the current share price and the inputted number of shares is $48.6 billion.


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RELATED COMPANIES Price Int.Val. Rating
NCLH Norwegian Crui 55.31 prem.  prem.
CCL Carnival 66.00 prem.  prem.
RCL Royal Caribbea 111.33 prem.  prem.

COMPANY NEWS

▶ 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]
▶ Cramer's Stop Trading: Carnival   [09:55AM  CNBC Videos]
▶ Carnival beats Street 2Q forecasts   [09:23AM  Associated Press]
▶ Trump's Cuba policy will put damper on some U.S. business   [Jun-16-17 03:15PM  American City Business Journals]
▶ 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]
▶ Princess Cruises Introduces Stanley the Bear   [May-03-17 03:50PM  PR Newswire]
▶ Holland America Line Introduces New Beverage Packages   [Apr-24-17 02:07PM  PR Newswire]
▶ Carnival Corp. subsidiary fined $40M for environmental violations   [Apr-19-17 08:25PM  American City Business Journals]
▶ Seabourn Announces 2017 Extraordinary Opportunity Event   [Apr-10-17 11:00AM  PR Newswire]
▶ ETFs with exposure to Carnival Plc : April 7, 2017   [Apr-07-17 04:18PM  Capital Cube]
Stock chart of CUK Financial statements of CUK Annual reports of CUK
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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