Intrinsic value of Norwegian Cruise Line Holdings - NCLH

Previous Close

$59.11

  Intrinsic Value

$24.28

stock screener

  Rating & Target

str. sell

-59%

Previous close

$59.11

 
Intrinsic value

$24.28

 
Up/down potential

-59%

 
Rating

str. sell

We calculate the intrinsic value of NCLH 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  12.17
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.29
  7.97
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
  5.45
  5.40
  5.36
  5.32
  5.29
Revenue, $m
  4,874
  5,420
  5,993
  6,594
  7,222
  7,877
  8,559
  9,269
  10,007
  10,774
  11,572
  12,401
  13,262
  14,157
  15,088
  16,057
  17,064
  18,114
  19,207
  20,346
  21,534
  22,773
  24,066
  25,416
  26,826
  28,300
  29,841
  31,453
  33,139
  34,903
  36,750
Variable operating expenses, $m
 
  3,117
  3,432
  3,762
  4,107
  4,467
  4,842
  5,232
  5,638
  6,059
  6,498
  6,814
  7,287
  7,779
  8,291
  8,823
  9,377
  9,954
  10,554
  11,180
  11,833
  12,514
  13,224
  13,966
  14,741
  15,551
  16,398
  17,283
  18,210
  19,179
  20,194
Fixed operating expenses, $m
 
  1,187
  1,217
  1,247
  1,278
  1,310
  1,343
  1,376
  1,411
  1,446
  1,482
  1,519
  1,557
  1,596
  1,636
  1,677
  1,719
  1,762
  1,806
  1,851
  1,898
  1,945
  1,994
  2,043
  2,095
  2,147
  2,201
  2,256
  2,312
  2,370
  2,429
Total operating expenses, $m
  3,949
  4,304
  4,649
  5,009
  5,385
  5,777
  6,185
  6,608
  7,049
  7,505
  7,980
  8,333
  8,844
  9,375
  9,927
  10,500
  11,096
  11,716
  12,360
  13,031
  13,731
  14,459
  15,218
  16,009
  16,836
  17,698
  18,599
  19,539
  20,522
  21,549
  22,623
Operating income, $m
  925
  1,116
  1,344
  1,585
  1,836
  2,099
  2,374
  2,660
  2,958
  3,269
  3,592
  4,067
  4,417
  4,782
  5,161
  5,556
  5,968
  6,398
  6,847
  7,315
  7,803
  8,314
  8,848
  9,406
  9,991
  10,602
  11,243
  11,914
  12,617
  13,354
  14,127
EBITDA, $m
  1,371
  1,694
  1,969
  2,258
  2,560
  2,876
  3,206
  3,550
  3,908
  4,281
  4,668
  5,072
  5,492
  5,929
  6,384
  6,858
  7,351
  7,866
  8,403
  8,963
  9,548
  10,159
  10,798
  11,466
  12,165
  12,896
  13,661
  14,463
  15,302
  16,182
  17,105
Interest expense (income), $m
  303
  295
  339
  385
  433
  484
  536
  591
  648
  707
  769
  833
  899
  968
  1,040
  1,115
  1,193
  1,273
  1,358
  1,445
  1,537
  1,632
  1,731
  1,835
  1,943
  2,057
  2,175
  2,299
  2,428
  2,563
  2,705
Earnings before tax, $m
  640
  821
  1,005
  1,199
  1,403
  1,616
  1,838
  2,069
  2,310
  2,562
  2,823
  3,234
  3,518
  3,813
  4,121
  4,442
  4,776
  5,125
  5,489
  5,869
  6,267
  6,682
  7,117
  7,571
  8,047
  8,546
  9,068
  9,615
  10,189
  10,791
  11,422
Tax expense, $m
  7
  222
  271
  324
  379
  436
  496
  559
  624
  692
  762
  873
  950
  1,030
  1,113
  1,199
  1,289
  1,384
  1,482
  1,585
  1,692
  1,804
  1,921
  2,044
  2,173
  2,307
  2,448
  2,596
  2,751
  2,914
  3,084
Net income, $m
  633
  599
  734
  876
  1,024
  1,179
  1,341
  1,510
  1,687
  1,870
  2,061
  2,361
  2,568
  2,784
  3,008
  3,242
  3,486
  3,741
  4,007
  4,285
  4,575
  4,878
  5,195
  5,527
  5,874
  6,238
  6,620
  7,019
  7,438
  7,877
  8,338

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  128
  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
  12,974
  14,300
  15,813
  17,398
  19,055
  20,782
  22,582
  24,456
  26,404
  28,428
  30,533
  32,719
  34,992
  37,354
  39,811
  42,366
  45,025
  47,794
  50,677
  53,683
  56,817
  60,086
  63,498
  67,060
  70,782
  74,671
  78,737
  82,989
  87,438
  92,093
  96,967
Adjusted assets (=assets-cash), $m
  12,846
  14,300
  15,813
  17,398
  19,055
  20,782
  22,582
  24,456
  26,404
  28,428
  30,533
  32,719
  34,992
  37,354
  39,811
  42,366
  45,025
  47,794
  50,677
  53,683
  56,817
  60,086
  63,498
  67,060
  70,782
  74,671
  78,737
  82,989
  87,438
  92,093
  96,967
Revenue / Adjusted assets
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
Average production assets, $m
  10,703
  11,902
  13,161
  14,480
  15,859
  17,297
  18,795
  20,354
  21,975
  23,661
  25,412
  27,232
  29,123
  31,089
  33,134
  35,261
  37,474
  39,778
  42,178
  44,679
  47,288
  50,008
  52,848
  55,813
  58,911
  62,147
  65,531
  69,070
  72,773
  76,648
  80,704
Working capital, $m
  -1,902
  -1,637
  -1,810
  -1,991
  -2,181
  -2,379
  -2,585
  -2,799
  -3,022
  -3,254
  -3,495
  -3,745
  -4,005
  -4,276
  -4,557
  -4,849
  -5,153
  -5,470
  -5,800
  -6,144
  -6,503
  -6,877
  -7,268
  -7,676
  -8,102
  -8,547
  -9,012
  -9,499
  -10,008
  -10,541
  -11,099
Total debt, $m
  6,399
  7,215
  8,194
  9,220
  10,291
  11,409
  12,574
  13,786
  15,046
  16,356
  17,718
  19,132
  20,603
  22,131
  23,721
  25,374
  27,094
  28,885
  30,751
  32,696
  34,723
  36,839
  39,046
  41,351
  43,759
  46,275
  48,906
  51,657
  54,535
  57,547
  60,701
Total liabilities, $m
  8,436
  9,252
  10,231
  11,257
  12,328
  13,446
  14,611
  15,823
  17,083
  18,393
  19,755
  21,169
  22,640
  24,168
  25,758
  27,411
  29,131
  30,922
  32,788
  34,733
  36,760
  38,876
  41,083
  43,388
  45,796
  48,312
  50,943
  53,694
  56,572
  59,584
  62,738
Total equity, $m
  4,538
  5,048
  5,582
  6,142
  6,726
  7,336
  7,972
  8,633
  9,320
  10,035
  10,778
  11,550
  12,352
  13,186
  14,053
  14,955
  15,894
  16,871
  17,889
  18,950
  20,056
  21,210
  22,415
  23,672
  24,986
  26,359
  27,794
  29,295
  30,866
  32,509
  34,229
Total liabilities and equity, $m
  12,974
  14,300
  15,813
  17,399
  19,054
  20,782
  22,583
  24,456
  26,403
  28,428
  30,533
  32,719
  34,992
  37,354
  39,811
  42,366
  45,025
  47,793
  50,677
  53,683
  56,816
  60,086
  63,498
  67,060
  70,782
  74,671
  78,737
  82,989
  87,438
  92,093
  96,967
Debt-to-equity ratio
  1.410
  1.430
  1.470
  1.500
  1.530
  1.560
  1.580
  1.600
  1.610
  1.630
  1.640
  1.660
  1.670
  1.680
  1.690
  1.700
  1.700
  1.710
  1.720
  1.730
  1.730
  1.740
  1.740
  1.750
  1.750
  1.760
  1.760
  1.760
  1.770
  1.770
  1.770
Adjusted equity ratio
  0.343
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  633
  599
  734
  876
  1,024
  1,179
  1,341
  1,510
  1,687
  1,870
  2,061
  2,361
  2,568
  2,784
  3,008
  3,242
  3,486
  3,741
  4,007
  4,285
  4,575
  4,878
  5,195
  5,527
  5,874
  6,238
  6,620
  7,019
  7,438
  7,877
  8,338
Depreciation, amort., depletion, $m
  446
  578
  625
  673
  724
  777
  832
  890
  950
  1,012
  1,077
  1,005
  1,075
  1,147
  1,223
  1,301
  1,383
  1,468
  1,556
  1,649
  1,745
  1,845
  1,950
  2,060
  2,174
  2,293
  2,418
  2,549
  2,685
  2,828
  2,978
Funds from operations, $m
  1,314
  1,177
  1,358
  1,549
  1,748
  1,957
  2,174
  2,400
  2,636
  2,882
  3,138
  3,366
  3,643
  3,931
  4,231
  4,543
  4,869
  5,209
  5,563
  5,933
  6,320
  6,723
  7,145
  7,587
  8,048
  8,532
  9,038
  9,568
  10,123
  10,706
  11,316
Change in working capital, $m
  74
  -165
  -173
  -181
  -190
  -198
  -206
  -214
  -223
  -232
  -241
  -250
  -260
  -270
  -281
  -292
  -304
  -317
  -330
  -344
  -359
  -374
  -391
  -408
  -426
  -445
  -465
  -487
  -509
  -533
  -558
Cash from operations, $m
  1,240
  1,342
  1,532
  1,730
  1,938
  2,154
  2,380
  2,615
  2,859
  3,114
  3,378
  3,616
  3,903
  4,201
  4,512
  4,836
  5,174
  5,526
  5,893
  6,277
  6,678
  7,097
  7,536
  7,994
  8,474
  8,977
  9,503
  10,055
  10,633
  11,239
  11,874
Maintenance CAPEX, $m
  0
  -395
  -439
  -486
  -534
  -585
  -638
  -694
  -751
  -811
  -873
  -938
  -1,005
  -1,075
  -1,147
  -1,223
  -1,301
  -1,383
  -1,468
  -1,556
  -1,649
  -1,745
  -1,845
  -1,950
  -2,060
  -2,174
  -2,293
  -2,418
  -2,549
  -2,685
  -2,828
New CAPEX, $m
  -1,092
  -1,199
  -1,259
  -1,319
  -1,378
  -1,438
  -1,498
  -1,559
  -1,621
  -1,685
  -1,751
  -1,820
  -1,891
  -1,966
  -2,044
  -2,127
  -2,213
  -2,304
  -2,400
  -2,501
  -2,608
  -2,721
  -2,840
  -2,965
  -3,097
  -3,237
  -3,384
  -3,539
  -3,703
  -3,875
  -4,056
Cash from investing activities, $m
  -1,129
  -1,594
  -1,698
  -1,805
  -1,912
  -2,023
  -2,136
  -2,253
  -2,372
  -2,496
  -2,624
  -2,758
  -2,896
  -3,041
  -3,191
  -3,350
  -3,514
  -3,687
  -3,868
  -4,057
  -4,257
  -4,466
  -4,685
  -4,915
  -5,157
  -5,411
  -5,677
  -5,957
  -6,252
  -6,560
  -6,884
Free cash flow, $m
  111
  -252
  -167
  -74
  25
  131
  244
  362
  487
  618
  754
  859
  1,007
  1,160
  1,320
  1,487
  1,659
  1,839
  2,025
  2,219
  2,421
  2,632
  2,851
  3,079
  3,317
  3,566
  3,826
  4,097
  4,381
  4,679
  4,990
Issuance/(repayment) of debt, $m
  10
  944
  979
  1,025
  1,072
  1,118
  1,165
  1,212
  1,260
  1,310
  1,361
  1,415
  1,470
  1,528
  1,589
  1,653
  1,720
  1,791
  1,866
  1,945
  2,028
  2,115
  2,208
  2,305
  2,408
  2,516
  2,631
  2,751
  2,878
  3,012
  3,153
Issuance/(repurchase) of shares, $m
  -43
  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  
  -98
  944
  979
  1,025
  1,072
  1,118
  1,165
  1,212
  1,260
  1,310
  1,361
  1,415
  1,470
  1,528
  1,589
  1,653
  1,720
  1,791
  1,866
  1,945
  2,028
  2,115
  2,208
  2,305
  2,408
  2,516
  2,631
  2,751
  2,878
  3,012
  3,153
Total cash flow (excl. dividends), $m
  12
  693
  812
  951
  1,097
  1,249
  1,408
  1,574
  1,747
  1,928
  2,115
  2,273
  2,477
  2,689
  2,910
  3,140
  3,380
  3,630
  3,891
  4,164
  4,449
  4,747
  5,058
  5,384
  5,725
  6,082
  6,457
  6,849
  7,260
  7,691
  8,143
Retained Cash Flow (-), $m
  -757
  -510
  -534
  -559
  -585
  -610
  -635
  -661
  -688
  -715
  -743
  -772
  -802
  -834
  -867
  -902
  -939
  -977
  -1,018
  -1,061
  -1,106
  -1,154
  -1,204
  -1,258
  -1,314
  -1,373
  -1,435
  -1,501
  -1,570
  -1,643
  -1,720
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
 
  183
  278
  392
  512
  639
  773
  913
  1,060
  1,213
  1,373
  1,501
  1,675
  1,855
  2,043
  2,238
  2,441
  2,653
  2,873
  3,103
  3,343
  3,593
  3,854
  4,126
  4,411
  4,709
  5,021
  5,348
  5,689
  6,047
  6,422
Discount rate, %
 
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
 
  168
  233
  297
  349
  387
  411
  422
  421
  408
  387
  349
  317
  281
  244
  206
  171
  138
  109
  84
  63
  46
  33
  22
  15
  10
  6
  4
  2
  1
  1
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

Norwegian Cruise Line Holdings Ltd. (NCLH) is a global cruise company. The Company operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. The Company had 25 ships with approximately 50,400 Berths, as of May 1, 2017. The Company's brands offer itineraries to various destinations around the world, including Europe, Asia, Australia, New Zealand, South America, Africa, Canada, Bermuda, Caribbean, Alaska and Hawaii. The Company's brands offer various features, amenities, and activities, including various accommodations, multiple dining venues, bars and lounges, spa, casino and retail shopping areas and various entertainment choices. All the brands offer a selection of shore excursions at each port of call, as well as hotel packages for stays before or after a voyage. As of December 31, 2016, its Norwegian offered 14 ships that were purpose-built to deliver the Freestyle Cruising product, which offered freedom, flexibility and choice to its guests.

FINANCIAL RATIOS  of  Norwegian Cruise Line Holdings (NCLH)

Valuation Ratios
P/E Ratio 21.2
Price to Sales 2.8
Price to Book 3
Price to Tangible Book
Price to Cash Flow 10.8
Price to Free Cash Flow 90.8
Growth Rates
Sales Growth Rate 12.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -2.7%
Cap. Spend. - 3 Yr. Gr. Rate 4.5%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 128.7%
Total Debt to Equity 141%
Interest Coverage 3
Management Effectiveness
Return On Assets 7.4%
Ret/ On Assets - 3 Yr. Avg. 6.4%
Return On Total Capital 6%
Ret/ On T. Cap. - 3 Yr. Avg. 4.9%
Return On Equity 15.2%
Return On Equity - 3 Yr. Avg. 12.6%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 41.5%
Gross Margin - 3 Yr. Avg. 39.4%
EBITDA Margin 28.5%
EBITDA Margin - 3 Yr. Avg. 27.3%
Operating Margin 19%
Oper. Margin - 3 Yr. Avg. 17.1%
Pre-Tax Margin 13.1%
Pre-Tax Margin - 3 Yr. Avg. 11.3%
Net Profit Margin 13%
Net Profit Margin - 3 Yr. Avg. 11.2%
Effective Tax Rate 1.1%
Eff/ Tax Rate - 3 Yr. Avg. 0.6%
Payout Ratio 0%

NCLH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NCLH stock intrinsic value calculation we used $4874 million for the last fiscal year's total revenue generated by Norwegian Cruise Line Holdings. The default revenue input number comes from 2016 income statement of Norwegian Cruise Line Holdings. 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 NCLH stock valuation model: a) initial revenue growth rate of 11.2% 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 8.7%, whose default value for NCLH is calculated based on our internal credit rating of Norwegian Cruise Line Holdings, 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 Norwegian Cruise Line Holdings.
    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 NCLH stock the variable cost ratio is equal to 57.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1158 million in the base year in the intrinsic value calculation for NCLH 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 4.7% for Norwegian Cruise Line Holdings.

Corporate tax rate of 27% is the nominal tax rate for Norwegian Cruise Line Holdings. 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 NCLH 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 NCLH are equal to 219.6%.

Life of production assets of 27.1 years is the average useful life of capital assets used in Norwegian Cruise Line Holdings 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 NCLH is equal to -30.2%. 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 - $4538 million for Norwegian Cruise Line Holdings - 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 230.047 million for Norwegian Cruise Line Holdings 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 Norwegian Cruise Line Holdings at the current share price and the inputted number of shares is $13.6 billion.

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COMPANY NEWS

▶ Norwegian Cruise Line Holdings' CFO leaving to pursue other opportunities   [Feb-05-18 03:20PM  American City Business Journals]
▶ 3 Top Cruise Line Stocks to Buy Now   [Feb-02-18 01:15PM  Motley Fool]
▶ Yahoo Finance Live: Midday Movers - Jan 11th, 2018   [09:40AM  Yahoo Finance Video]
▶ Carnival's Q4 Earnings Lift Cruise Stocks   [Dec-19-17 12:52PM  Zacks]
▶ Norwegian Cruise Line Holdings stock moves to NYSE from Nasdaq   [Dec-07-17 11:30AM  American City Business Journals]
▶ Norwegian Cruise Line beats Street 3Q forecasts   [07:23AM  Associated Press]
▶ Argus Embarks On Norwegian Cruise Lines With A Buy   [Oct-25-17 11:40AM  Benzinga]
▶ Norwegian Cruise Line Rallies on S&P 500 Inclusion   [Oct-05-17 10:55AM  Barrons.com]
▶ As storm damage shutters Caribbean ports, cruise lines adjust itineraries   [Sep-20-17 06:50AM  American City Business Journals]
▶ Carnival: That Sinking Feeling   [Sep-15-17 12:32PM  Barrons.com]
▶ Stocks With Rising Composite Ratings: Norwegian Cruise Line   [03:00AM  Investor's Business Daily]
▶ Yahoo Finance Live: Market Movers - Aug 28th, 2017   [Aug-28-17 07:20AM  Yahoo Finance Video]
▶ Bulls sail with Norwegian Cruise Line & a trade update   [Aug-11-17 01:48PM  CNBC Videos]
Financial statements of NCLH
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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