Intrinsic value of Carnival ADR - CUK

Previous Close

$66.92

  Intrinsic Value

$81.68

stock screener

  Rating & Target

buy

+22%

Previous close

$66.92

 
Intrinsic value

$81.68

 
Up/down potential

+22%

 
Rating

buy

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 48.0

 

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
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
Revenue, $m
  16,389
  17,733
  19,130
  20,583
  22,092
  23,660
  25,290
  26,985
  28,747
  30,581
  32,489
  34,476
  36,546
  38,703
  40,953
  43,301
  45,751
  48,310
  50,983
  53,777
  56,699
  59,754
  62,951
  66,297
  69,800
  73,468
  77,310
  81,336
  85,554
  89,975
  94,609
Variable operating expenses, $m
 
  4,658
  5,002
  5,359
  5,731
  6,117
  6,519
  6,936
  7,370
  7,821
  8,291
  8,489
  8,999
  9,530
  10,085
  10,663
  11,266
  11,896
  12,554
  13,242
  13,962
  14,714
  15,501
  16,325
  17,188
  18,091
  19,037
  20,028
  21,067
  22,156
  23,297
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
  14,110
  14,690
  15,289
  15,909
  16,550
  17,213
  17,897
  18,605
  19,337
  20,095
  20,588
  21,400
  22,241
  23,114
  24,018
  24,955
  25,927
  26,936
  27,983
  29,072
  30,201
  31,376
  32,596
  33,866
  35,186
  36,560
  37,989
  39,477
  41,026
  42,639
Operating income, $m
  3,071
  3,624
  4,441
  5,293
  6,183
  7,110
  8,078
  9,088
  10,143
  11,244
  12,394
  13,888
  15,145
  16,462
  17,840
  19,283
  20,797
  22,383
  24,047
  25,794
  27,627
  29,553
  31,575
  33,700
  35,934
  38,282
  40,750
  43,346
  46,077
  48,949
  51,970
EBITDA, $m
  4,809
  5,520
  6,463
  7,447
  8,473
  9,543
  10,658
  11,822
  13,036
  14,303
  15,626
  17,008
  18,453
  19,965
  21,547
  23,203
  24,938
  26,756
  28,662
  30,662
  32,759
  34,961
  37,273
  39,701
  42,252
  44,932
  47,748
  50,709
  53,821
  57,093
  60,534
Interest expense (income), $m
  0
  308
  354
  400
  449
  500
  552
  607
  664
  723
  784
  848
  915
  984
  1,057
  1,132
  1,211
  1,293
  1,379
  1,468
  1,562
  1,660
  1,762
  1,870
  1,982
  2,099
  2,222
  2,351
  2,486
  2,627
  2,776
Earnings before tax, $m
  2,828
  3,316
  4,087
  4,893
  5,734
  6,611
  7,526
  8,481
  9,479
  10,521
  11,610
  13,039
  14,230
  15,477
  16,783
  18,151
  19,586
  21,090
  22,669
  24,325
  26,065
  27,893
  29,813
  31,831
  33,952
  36,182
  38,528
  40,995
  43,591
  46,322
  49,195
Tax expense, $m
  49
  895
  1,104
  1,321
  1,548
  1,785
  2,032
  2,290
  2,559
  2,841
  3,135
  3,521
  3,842
  4,179
  4,531
  4,901
  5,288
  5,694
  6,121
  6,568
  7,038
  7,531
  8,049
  8,594
  9,167
  9,769
  10,403
  11,069
  11,770
  12,507
  13,283
Net income, $m
  2,779
  2,421
  2,984
  3,572
  4,185
  4,826
  5,494
  6,191
  6,920
  7,680
  8,475
  9,519
  10,388
  11,298
  12,252
  13,250
  14,298
  15,396
  16,548
  17,758
  19,028
  20,362
  21,763
  23,236
  24,785
  26,413
  28,126
  29,927
  31,821
  33,815
  35,912

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
  41,432
  44,697
  48,090
  51,617
  55,281
  59,090
  63,049
  67,167
  71,450
  75,908
  80,551
  85,387
  90,428
  95,685
  101,170
  106,895
  112,874
  119,120
  125,648
  132,473
  139,612
  147,082
  154,899
  163,084
  171,654
  180,631
  190,036
  199,892
  210,221
  221,049
Adjusted assets (=assets-cash), $m
  38,278
  41,432
  44,697
  48,090
  51,617
  55,281
  59,090
  63,049
  67,167
  71,450
  75,908
  80,551
  85,387
  90,428
  95,685
  101,170
  106,895
  112,874
  119,120
  125,648
  132,473
  139,612
  147,082
  154,899
  163,084
  171,654
  180,631
  190,036
  199,892
  210,221
  221,049
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
  18,620
  20,087
  21,612
  23,196
  24,843
  26,555
  28,334
  30,185
  32,110
  34,113
  36,200
  38,373
  40,638
  43,001
  45,466
  48,039
  50,725
  53,532
  56,466
  59,534
  62,742
  66,099
  69,612
  73,290
  77,141
  81,176
  85,402
  89,831
  94,473
  99,339
Working capital, $m
  -5,383
  -5,284
  -5,701
  -6,134
  -6,583
  -7,051
  -7,537
  -8,042
  -8,567
  -9,113
  -9,682
  -10,274
  -10,891
  -11,534
  -12,204
  -12,904
  -13,634
  -14,396
  -15,193
  -16,026
  -16,896
  -17,807
  -18,759
  -19,757
  -20,800
  -21,893
  -23,038
  -24,238
  -25,495
  -26,812
  -28,193
Total debt, $m
  9,399
  10,102
  11,441
  12,832
  14,278
  15,780
  17,342
  18,965
  20,653
  22,410
  24,237
  26,141
  28,124
  30,191
  32,346
  34,595
  36,942
  39,393
  41,954
  44,631
  47,429
  50,356
  53,419
  56,624
  59,979
  63,493
  67,174
  71,030
  75,071
  79,306
  83,745
Total liabilities, $m
  16,284
  16,987
  18,326
  19,717
  21,163
  22,665
  24,227
  25,850
  27,538
  29,295
  31,122
  33,026
  35,009
  37,076
  39,231
  41,480
  43,827
  46,278
  48,839
  51,516
  54,314
  57,241
  60,304
  63,509
  66,864
  70,378
  74,059
  77,915
  81,956
  86,191
  90,630
Total equity, $m
  22,597
  24,445
  26,371
  28,373
  30,454
  32,616
  34,863
  37,199
  39,628
  42,156
  44,786
  47,525
  50,378
  53,353
  56,454
  59,690
  63,068
  66,595
  70,281
  74,132
  78,159
  82,371
  86,778
  91,391
  96,219
  101,276
  106,572
  112,121
  117,936
  124,030
  130,419
Total liabilities and equity, $m
  38,881
  41,432
  44,697
  48,090
  51,617
  55,281
  59,090
  63,049
  67,166
  71,451
  75,908
  80,551
  85,387
  90,429
  95,685
  101,170
  106,895
  112,873
  119,120
  125,648
  132,473
  139,612
  147,082
  154,900
  163,083
  171,654
  180,631
  190,036
  199,892
  210,221
  221,049
Debt-to-equity ratio
  0.416
  0.410
  0.430
  0.450
  0.470
  0.480
  0.500
  0.510
  0.520
  0.530
  0.540
  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
  0.640
  0.640
  0.640
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
  2,421
  2,984
  3,572
  4,185
  4,826
  5,494
  6,191
  6,920
  7,680
  8,475
  9,519
  10,388
  11,298
  12,252
  13,250
  14,298
  15,396
  16,548
  17,758
  19,028
  20,362
  21,763
  23,236
  24,785
  26,413
  28,126
  29,927
  31,821
  33,815
  35,912
Depreciation, amort., depletion, $m
  1,738
  1,896
  2,023
  2,154
  2,291
  2,433
  2,580
  2,734
  2,893
  3,059
  3,232
  3,121
  3,308
  3,503
  3,707
  3,919
  4,141
  4,373
  4,615
  4,868
  5,132
  5,409
  5,698
  6,001
  6,318
  6,650
  6,998
  7,362
  7,744
  8,144
  8,564
Funds from operations, $m
  5,578
  4,317
  5,006
  5,726
  6,476
  7,258
  8,074
  8,925
  9,813
  10,739
  11,707
  12,639
  13,696
  14,802
  15,959
  17,170
  18,439
  19,769
  21,163
  22,625
  24,160
  25,770
  27,461
  29,237
  31,103
  33,063
  35,123
  37,289
  39,565
  41,959
  44,476
Change in working capital, $m
  444
  -400
  -416
  -433
  -450
  -467
  -486
  -505
  -525
  -546
  -569
  -592
  -617
  -643
  -670
  -700
  -730
  -763
  -797
  -833
  -871
  -911
  -953
  -997
  -1,044
  -1,093
  -1,145
  -1,200
  -1,257
  -1,317
  -1,381
Cash from operations, $m
  5,134
  4,717
  5,423
  6,159
  6,926
  7,726
  8,560
  9,430
  10,338
  11,286
  12,275
  13,231
  14,313
  15,445
  16,629
  17,869
  19,169
  20,531
  21,960
  23,458
  25,030
  26,681
  28,414
  30,234
  32,147
  34,156
  36,268
  38,488
  40,822
  43,276
  45,857
Maintenance CAPEX, $m
  0
  -1,483
  -1,605
  -1,732
  -1,863
  -2,000
  -2,142
  -2,289
  -2,443
  -2,602
  -2,768
  -2,941
  -3,121
  -3,308
  -3,503
  -3,707
  -3,919
  -4,141
  -4,373
  -4,615
  -4,868
  -5,132
  -5,409
  -5,698
  -6,001
  -6,318
  -6,650
  -6,998
  -7,362
  -7,744
  -8,144
New CAPEX, $m
  -3,062
  -1,419
  -1,467
  -1,525
  -1,585
  -1,647
  -1,712
  -1,779
  -1,850
  -1,925
  -2,004
  -2,086
  -2,173
  -2,265
  -2,362
  -2,465
  -2,573
  -2,687
  -2,807
  -2,934
  -3,067
  -3,208
  -3,357
  -3,513
  -3,678
  -3,852
  -4,034
  -4,227
  -4,429
  -4,642
  -4,866
Cash from investing activities, $m
  -3,323
  -2,902
  -3,072
  -3,257
  -3,448
  -3,647
  -3,854
  -4,068
  -4,293
  -4,527
  -4,772
  -5,027
  -5,294
  -5,573
  -5,865
  -6,172
  -6,492
  -6,828
  -7,180
  -7,549
  -7,935
  -8,340
  -8,766
  -9,211
  -9,679
  -10,170
  -10,684
  -11,225
  -11,791
  -12,386
  -13,010
Free cash flow, $m
  1,811
  1,815
  2,350
  2,902
  3,478
  4,079
  4,707
  5,361
  6,045
  6,758
  7,504
  8,204
  9,019
  9,871
  10,763
  11,698
  12,677
  13,703
  14,780
  15,909
  17,095
  18,340
  19,649
  21,023
  22,468
  23,987
  25,584
  27,264
  29,031
  30,890
  32,847
Issuance/(repayment) of debt, $m
  711
  1,306
  1,339
  1,391
  1,446
  1,502
  1,562
  1,623
  1,688
  1,756
  1,828
  1,903
  1,983
  2,067
  2,155
  2,249
  2,347
  2,451
  2,561
  2,677
  2,798
  2,927
  3,062
  3,205
  3,356
  3,514
  3,681
  3,856
  4,041
  4,235
  4,439
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
  1,306
  1,339
  1,391
  1,446
  1,502
  1,562
  1,623
  1,688
  1,756
  1,828
  1,903
  1,983
  2,067
  2,155
  2,249
  2,347
  2,451
  2,561
  2,677
  2,798
  2,927
  3,062
  3,205
  3,356
  3,514
  3,681
  3,856
  4,041
  4,235
  4,439
Total cash flow (excl. dividends), $m
  185
  3,121
  3,689
  4,293
  4,924
  5,582
  6,268
  6,985
  7,733
  8,515
  9,332
  10,108
  11,002
  11,938
  12,919
  13,946
  15,024
  16,154
  17,341
  18,586
  19,894
  21,267
  22,711
  24,228
  25,823
  27,501
  29,265
  31,120
  33,072
  35,125
  37,286
Retained Cash Flow (-), $m
  1,174
  -1,848
  -1,926
  -2,002
  -2,081
  -2,162
  -2,247
  -2,336
  -2,429
  -2,527
  -2,630
  -2,739
  -2,853
  -2,974
  -3,102
  -3,236
  -3,378
  -3,527
  -3,685
  -3,852
  -4,027
  -4,212
  -4,407
  -4,612
  -4,829
  -5,057
  -5,296
  -5,549
  -5,815
  -6,094
  -6,388
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
 
  1,274
  1,763
  2,291
  2,843
  3,420
  4,021
  4,649
  5,304
  5,987
  6,701
  7,369
  8,148
  8,964
  9,817
  10,710
  11,646
  12,627
  13,655
  14,734
  15,867
  17,055
  18,304
  19,616
  20,995
  22,444
  23,968
  25,571
  27,257
  29,031
  30,898
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
 
  1,216
  1,601
  1,969
  2,300
  2,590
  2,835
  3,031
  3,177
  3,272
  3,315
  3,273
  3,222
  3,126
  2,990
  2,819
  2,621
  2,400
  2,165
  1,924
  1,681
  1,446
  1,221
  1,014
  825
  659
  515
  394
  295
  215
  153
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 is a leisure travel company. The Company's segments include North America, and Europe, Australia & Asia (EAA). Its North America segment includes Carnival Cruise Line, Princess Cruises (Princess), Holland America Line and Seabourn. Its EAA segment includes Costa Cruises (Costa), AIDA Cruises (AIDA), P&O Cruises (the United Kingdom), P&O Cruises (Australia) and Cunard. It also includes Cruise Support segment, which represents its portfolio of port destinations and private islands. In addition to its cruise operations, it owns Holland America Princess Alaska Tours, a tour company in Alaska and the Canadian Yukon. Its tour company owns and operates hotels, lodges, glass-domed railcars and motorcoaches. Its Carnival Cruise Line offers cruises generally from 3 to 8 days with almost all of its ships departing from 16 convenient United States home ports located along the East, Gulf and West coasts, Puerto Rico and Hawaii, as of November 30, 2016.

FINANCIAL RATIOS  of  Carnival ADR (CUK)

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 23.4
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 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. 5.9%
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 8.2% 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 105%.

Life of production assets of 11.6 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 717.055 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 $48.0 billion.

RELATED COMPANIES Price Int.Val. Rating
NCLH Norwegian Crui 54.72 26.81  str.sell
CCL Carnival 67.03 81.50  buy
RCL Royal Caribbea 125.45 15.19  str.sell

COMPANY NEWS

▶ Princess Cruises to Name Next Ship Sky Princess   [Nov-30-17 01:00PM  PR Newswire]
▶ Carnival to expand short-cruise capacity from Galveston   [09:00AM  American City Business Journals]
▶ These 3 Stocks Just Raised Their Dividends   [Oct-24-17 08:17AM  Motley Fool]
▶ Why Cruise Stocks Have Been Crushed   [Oct-20-17 04:39PM  TheStreet.com]
▶ Carnival raises quarterly dividend 12%   [09:25AM  MarketWatch]
▶ Why Port Tampa Bay hit record operating revenue   [Oct-09-17 08:35PM  American City Business Journals]
▶ Carnival Elation's renovation adds new cabins, water park (Photos)   [Oct-05-17 08:05AM  American City Business Journals]
▶ Will Cuba travel warning affect cruises and Southwest's Tampa to Havana flights?   [Oct-02-17 02:15PM  American City Business Journals]
▶ At $47.3, Is Carnival plc (LSE:CCL) A Buy?   [10:44AM  Simply Wall St.]
▶ Top 3 Stocks for Retirees to Consider   [07:36AM  Motley Fool]
▶ Company News For Sep 27, 2017   [09:49AM  Zacks]
▶ Carnival posts 3Q profit   [Sep-26-17 07:41PM  Associated Press]
▶ Carnival tops Street 3Q forecasts   [07:37PM  Associated Press]
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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