Intrinsic value of Carnival ADR - CUK

Previous Close

$68.08

  Intrinsic Value

$29.76

stock screener

  Rating & Target

str. sell

-56%

  Value-price divergence*

+80%

Previous close

$68.08

 
Intrinsic value

$29.76

 
Up/down potential

-56%

 
Rating

str. sell

 
Value-price divergence*

+80%

*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 49.9

 

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
  5,031
  5,362
  5,726
  6,124
  6,556
  7,024
  7,530
  8,074
  8,659
  9,286
  9,958
  10,675
  11,440
  12,256
  13,126
  14,050
  15,033
  16,078
  17,186
  18,362
  19,609
  20,931
  22,331
  23,813
  25,382
  27,042
  28,797
  30,654
  32,616
  34,689
Interest expense (income), $m
  0
  310
  331
  353
  377
  403
  430
  459
  489
  521
  556
  592
  630
  670
  713
  757
  804
  854
  906
  962
  1,020
  1,080
  1,145
  1,212
  1,283
  1,358
  1,436
  1,518
  1,605
  1,696
  1,792
Earnings before tax, $m
  2,828
  2,770
  3,016
  3,288
  3,588
  3,916
  4,273
  4,661
  5,082
  5,535
  6,023
  6,838
  7,401
  8,003
  8,646
  9,334
  10,067
  10,849
  11,681
  12,566
  13,507
  14,507
  15,568
  16,695
  17,890
  19,157
  20,499
  21,921
  23,426
  25,020
  26,706
Tax expense, $m
  49
  748
  814
  888
  969
  1,057
  1,154
  1,259
  1,372
  1,494
  1,626
  1,846
  1,998
  2,161
  2,334
  2,520
  2,718
  2,929
  3,154
  3,393
  3,647
  3,917
  4,203
  4,508
  4,830
  5,172
  5,535
  5,919
  6,325
  6,755
  7,211
Net income, $m
  2,779
  2,022
  2,202
  2,400
  2,619
  2,858
  3,119
  3,403
  3,710
  4,040
  4,397
  4,992
  5,402
  5,842
  6,312
  6,814
  7,349
  7,919
  8,527
  9,173
  9,860
  10,590
  11,365
  12,187
  13,060
  13,984
  14,964
  16,002
  17,101
  18,264
  19,495

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
  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
  38,333
  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
  33,415
  34,687
  36,047
  37,499
  39,046
  40,690
  42,437
  44,288
  46,248
  48,322
  50,513
  52,827
  55,270
  57,846
  60,562
  63,424
  66,438
  69,612
  72,954
  76,470
  80,169
  84,061
  88,154
  92,457
  96,982
  101,738
  106,737
  111,991
  117,513
  123,314
  129,410
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
  9,454
  9,451
  10,091
  10,775
  11,504
  12,278
  13,101
  13,973
  14,896
  15,872
  16,904
  17,994
  19,145
  20,358
  21,637
  22,985
  24,404
  25,899
  27,473
  29,129
  30,871
  32,704
  34,631
  36,658
  38,789
  41,029
  43,384
  45,858
  48,458
  51,191
  54,062
Total liabilities, $m
  16,339
  16,336
  16,976
  17,660
  18,389
  19,163
  19,986
  20,858
  21,781
  22,757
  23,789
  24,879
  26,030
  27,243
  28,522
  29,870
  31,289
  32,784
  34,358
  36,014
  37,756
  39,589
  41,516
  43,543
  45,674
  47,914
  50,269
  52,743
  55,343
  58,076
  60,947
Total equity, $m
  22,597
  23,411
  24,329
  25,309
  26,353
  27,463
  28,641
  29,891
  31,214
  32,613
  34,092
  35,654
  37,303
  39,042
  40,875
  42,806
  44,841
  46,983
  49,238
  51,611
  54,108
  56,735
  59,497
  62,401
  65,455
  68,665
  72,039
  75,585
  79,312
  83,228
  87,342
Total liabilities and equity, $m
  38,936
  39,747
  41,305
  42,969
  44,742
  46,626
  48,627
  50,749
  52,995
  55,370
  57,881
  60,533
  63,333
  66,285
  69,397
  72,676
  76,130
  79,767
  83,596
  87,625
  91,864
  96,324
  101,013
  105,944
  111,129
  116,579
  122,308
  128,328
  134,655
  141,304
  148,289
Debt-to-equity ratio
  0.418
  0.400
  0.410
  0.430
  0.440
  0.450
  0.460
  0.470
  0.480
  0.490
  0.500
  0.500
  0.510
  0.520
  0.530
  0.540
  0.540
  0.550
  0.560
  0.560
  0.570
  0.580
  0.580
  0.590
  0.590
  0.600
  0.600
  0.610
  0.610
  0.620
  0.620
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
  2,022
  2,202
  2,400
  2,619
  2,858
  3,119
  3,403
  3,710
  4,040
  4,397
  4,992
  5,402
  5,842
  6,312
  6,814
  7,349
  7,919
  8,527
  9,173
  9,860
  10,590
  11,365
  12,187
  13,060
  13,984
  14,964
  16,002
  17,101
  18,264
  19,495
Depreciation, amort., depletion, $m
  1,738
  1,951
  2,016
  2,085
  2,159
  2,238
  2,321
  2,410
  2,504
  2,603
  2,708
  2,528
  2,644
  2,768
  2,898
  3,035
  3,179
  3,331
  3,491
  3,659
  3,836
  4,022
  4,218
  4,424
  4,640
  4,868
  5,107
  5,358
  5,623
  5,900
  6,192
Funds from operations, $m
  5,578
  3,973
  4,217
  4,485
  4,778
  5,096
  5,441
  5,813
  6,213
  6,644
  7,105
  7,520
  8,047
  8,610
  9,209
  9,848
  10,528
  11,250
  12,017
  12,832
  13,696
  14,612
  15,583
  16,611
  17,700
  18,852
  20,071
  21,360
  22,724
  24,165
  25,687
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
  4,035
  4,284
  4,557
  4,854
  5,177
  5,527
  5,904
  6,310
  6,745
  7,212
  7,633
  8,167
  8,736
  9,343
  9,989
  10,676
  11,406
  12,181
  13,004
  13,877
  14,803
  15,784
  16,822
  17,922
  19,085
  20,316
  21,618
  22,994
  24,449
  25,986
Maintenance CAPEX, $m
  0
  -1,599
  -1,660
  -1,725
  -1,794
  -1,868
  -1,947
  -2,030
  -2,119
  -2,213
  -2,312
  -2,417
  -2,528
  -2,644
  -2,768
  -2,898
  -3,035
  -3,179
  -3,331
  -3,491
  -3,659
  -3,836
  -4,022
  -4,218
  -4,424
  -4,640
  -4,868
  -5,107
  -5,358
  -5,623
  -5,900
New CAPEX, $m
  -3,062
  -1,272
  -1,360
  -1,452
  -1,547
  -1,645
  -1,746
  -1,851
  -1,960
  -2,074
  -2,191
  -2,314
  -2,442
  -2,576
  -2,716
  -2,862
  -3,014
  -3,174
  -3,341
  -3,516
  -3,700
  -3,892
  -4,093
  -4,304
  -4,525
  -4,756
  -4,999
  -5,254
  -5,521
  -5,802
  -6,096
Cash from investing activities, $m
  -3,323
  -2,871
  -3,020
  -3,177
  -3,341
  -3,513
  -3,693
  -3,881
  -4,079
  -4,287
  -4,503
  -4,731
  -4,970
  -5,220
  -5,484
  -5,760
  -6,049
  -6,353
  -6,672
  -7,007
  -7,359
  -7,728
  -8,115
  -8,522
  -8,949
  -9,396
  -9,867
  -10,361
  -10,879
  -11,425
  -11,996
Free cash flow, $m
  1,811
  1,165
  1,265
  1,380
  1,513
  1,664
  1,833
  2,022
  2,230
  2,459
  2,709
  2,902
  3,197
  3,515
  3,859
  4,229
  4,627
  5,053
  5,509
  5,997
  6,519
  7,076
  7,669
  8,301
  8,973
  9,689
  10,449
  11,257
  12,115
  13,025
  13,990
Issuance/(repayment) of debt, $m
  711
  600
  640
  684
  729
  775
  822
  872
  923
  977
  1,032
  1,090
  1,150
  1,213
  1,279
  1,348
  1,420
  1,495
  1,574
  1,656
  1,742
  1,833
  1,927
  2,027
  2,131
  2,240
  2,354
  2,474
  2,600
  2,732
  2,871
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
  600
  640
  684
  729
  775
  822
  872
  923
  977
  1,032
  1,090
  1,150
  1,213
  1,279
  1,348
  1,420
  1,495
  1,574
  1,656
  1,742
  1,833
  1,927
  2,027
  2,131
  2,240
  2,354
  2,474
  2,600
  2,732
  2,871
Total cash flow (excl. dividends), $m
  185
  1,765
  1,905
  2,064
  2,241
  2,439
  2,656
  2,894
  3,153
  3,435
  3,741
  3,992
  4,347
  4,729
  5,138
  5,577
  6,046
  6,548
  7,083
  7,653
  8,261
  8,908
  9,596
  10,328
  11,104
  11,929
  12,804
  13,731
  14,715
  15,757
  16,861
Retained Cash Flow (-), $m
  1,174
  -814
  -918
  -980
  -1,044
  -1,110
  -1,179
  -1,249
  -1,323
  -1,399
  -1,479
  -1,562
  -1,648
  -1,739
  -1,833
  -1,932
  -2,035
  -2,142
  -2,255
  -2,373
  -2,497
  -2,626
  -2,762
  -2,905
  -3,054
  -3,210
  -3,374
  -3,546
  -3,727
  -3,916
  -4,114
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
 
  951
  987
  1,084
  1,197
  1,328
  1,477
  1,644
  1,830
  2,036
  2,262
  2,430
  2,698
  2,990
  3,305
  3,645
  4,012
  4,405
  4,828
  5,280
  5,764
  6,282
  6,834
  7,423
  8,051
  8,719
  9,430
  10,185
  10,988
  11,841
  12,746
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
 
  908
  897
  931
  969
  1,006
  1,042
  1,072
  1,097
  1,113
  1,119
  1,079
  1,067
  1,043
  1,007
  960
  903
  837
  766
  689
  611
  532
  456
  384
  316
  256
  203
  157
  119
  88
  63
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 17.8
Price to Sales 3
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 9.6
Price to Free Cash Flow 23.9
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 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 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 -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 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 $49.9 billion.

RELATED COMPANIES Price Int.Val. Rating
NCLH Norwegian Crui 55.78 17.52  str.sell
CCL Carnival 67.46 44.09  sell
RCL Royal Caribbea 118.81 11.61  str.sell

COMPANY NEWS

▶ Port Tampa Bay gets five more cruises to Havana   [Aug-17-17 03:30PM  American City Business Journals]
▶ Carnival CEO on Trumps remarks about Charlottesville   [05:03PM  Fox Business Videos]
▶ Millennials Love Taking Cruises, Carnival CEO Reveals   [Aug-03-17 09:20PM  TheStreet.com]
▶ 3 Value Stocks for Retirement   [02:43PM  Motley Fool]
▶ Cruise Line Earnings: Full Steam Ahead!   [01:12PM  Barrons.com]
▶ Cunard Offers 'Drinks on Us'   [10:07AM  PR Newswire]
▶ FTSE 100 knocked back as banks fall, pound surges   [Jul-14-17 12:34PM  MarketWatch]
▶ Cunard Receives Travel + Leisure 2017 World's Best Award   [Jul-11-17 12:00PM  PR Newswire]
▶ HMS Queen Elizabeth meets RMS Queen Elizabeth   [Jul-07-17 03:58PM  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]
▶ 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]
Stock chart of CUK Financial statements 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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