Intrinsic value of Norwegian Cruise Line Holdings - NCLH

Previous Close

$53.65

  Intrinsic Value

$26.81

stock screener

  Rating & Target

str. sell

-50%

Previous close

$53.65

 
Intrinsic value

$26.81

 
Up/down potential

-50%

 
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

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 12.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  12.17
  13.20
  12.38
  11.64
  10.98
  10.38
  9.84
  9.36
  8.92
  8.53
  8.18
  7.86
  7.57
  7.32
  7.08
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
  5.65
  5.59
  5.53
  5.48
  5.43
  5.39
Revenue, $m
  4,874
  5,517
  6,200
  6,922
  7,682
  8,480
  9,314
  10,186
  11,095
  12,041
  13,025
  14,049
  15,113
  16,219
  17,368
  18,562
  19,803
  21,095
  22,438
  23,836
  25,292
  26,808
  28,389
  30,038
  31,758
  33,554
  35,429
  37,388
  39,436
  41,577
  43,816
Variable operating expenses, $m
 
  3,171
  3,546
  3,943
  4,360
  4,798
  5,257
  5,736
  6,235
  6,755
  7,296
  7,720
  8,305
  8,912
  9,544
  10,200
  10,882
  11,591
  12,330
  13,098
  13,898
  14,731
  15,600
  16,506
  17,451
  18,438
  19,468
  20,545
  21,670
  22,847
  24,077
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
  4,358
  4,763
  5,190
  5,638
  6,108
  6,600
  7,112
  7,646
  8,201
  8,778
  9,239
  9,862
  10,508
  11,180
  11,877
  12,601
  13,353
  14,136
  14,949
  15,796
  16,676
  17,594
  18,549
  19,546
  20,585
  21,669
  22,801
  23,982
  25,217
  26,506
Operating income, $m
  925
  1,160
  1,438
  1,733
  2,044
  2,371
  2,714
  3,073
  3,448
  3,839
  4,247
  4,810
  5,251
  5,710
  6,188
  6,685
  7,202
  7,741
  8,302
  8,887
  9,496
  10,132
  10,796
  11,489
  12,212
  12,969
  13,760
  14,588
  15,454
  16,361
  17,310
EBITDA, $m
  1,371
  1,746
  2,079
  2,432
  2,805
  3,197
  3,608
  4,038
  4,486
  4,954
  5,441
  5,948
  6,476
  7,024
  7,595
  8,189
  8,807
  9,450
  10,120
  10,818
  11,546
  12,304
  13,096
  13,923
  14,786
  15,688
  16,631
  17,617
  18,649
  19,730
  20,861
Interest expense (income), $m
  303
  295
  347
  402
  460
  521
  585
  652
  722
  794
  870
  949
  1,031
  1,117
  1,206
  1,298
  1,394
  1,493
  1,597
  1,705
  1,817
  1,934
  2,055
  2,182
  2,314
  2,452
  2,596
  2,747
  2,904
  3,068
  3,240
Earnings before tax, $m
  640
  865
  1,091
  1,331
  1,584
  1,850
  2,130
  2,422
  2,727
  3,045
  3,376
  3,860
  4,220
  4,593
  4,982
  5,387
  5,809
  6,248
  6,705
  7,182
  7,680
  8,199
  8,741
  9,307
  9,898
  10,517
  11,164
  11,841
  12,550
  13,292
  14,070
Tax expense, $m
  7
  234
  295
  359
  428
  500
  575
  654
  736
  822
  912
  1,042
  1,139
  1,240
  1,345
  1,455
  1,568
  1,687
  1,810
  1,939
  2,073
  2,214
  2,360
  2,513
  2,672
  2,840
  3,014
  3,197
  3,388
  3,589
  3,799
Net income, $m
  633
  631
  796
  971
  1,156
  1,351
  1,555
  1,768
  1,991
  2,223
  2,465
  2,818
  3,080
  3,353
  3,637
  3,933
  4,240
  4,561
  4,895
  5,243
  5,606
  5,985
  6,381
  6,794
  7,226
  7,677
  8,150
  8,644
  9,161
  9,703
  10,271

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
  14,558
  16,360
  18,265
  20,270
  22,374
  24,576
  26,875
  29,273
  31,770
  34,368
  37,069
  39,876
  42,794
  45,825
  48,976
  52,252
  55,658
  59,202
  62,891
  66,732
  70,734
  74,906
  79,256
  83,795
  88,532
  93,480
  98,650
  104,052
  109,702
  115,610
Adjusted assets (=assets-cash), $m
  12,846
  14,558
  16,360
  18,265
  20,270
  22,374
  24,576
  26,875
  29,273
  31,770
  34,368
  37,069
  39,876
  42,794
  45,825
  48,976
  52,252
  55,658
  59,202
  62,891
  66,732
  70,734
  74,906
  79,256
  83,795
  88,532
  93,480
  98,650
  104,052
  109,702
  115,610
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
  12,116
  13,616
  15,201
  16,870
  18,621
  20,454
  22,368
  24,364
  26,442
  28,604
  30,852
  33,188
  35,616
  38,140
  40,762
  43,488
  46,324
  49,273
  52,343
  55,540
  58,871
  62,343
  65,963
  69,741
  73,684
  77,802
  82,104
  86,601
  91,303
  96,221
Working capital, $m
  -1,902
  -1,666
  -1,873
  -2,091
  -2,320
  -2,561
  -2,813
  -3,076
  -3,351
  -3,636
  -3,934
  -4,243
  -4,564
  -4,898
  -5,245
  -5,606
  -5,981
  -6,371
  -6,776
  -7,198
  -7,638
  -8,096
  -8,574
  -9,071
  -9,591
  -10,133
  -10,700
  -11,291
  -11,910
  -12,556
  -13,233
Total debt, $m
  6,399
  7,382
  8,548
  9,780
  11,077
  12,439
  13,863
  15,351
  16,903
  18,518
  20,199
  21,947
  23,763
  25,650
  27,612
  29,651
  31,770
  33,974
  36,267
  38,654
  41,139
  43,728
  46,427
  49,242
  52,178
  55,243
  58,445
  61,789
  65,285
  68,940
  72,763
Total liabilities, $m
  8,436
  9,419
  10,585
  11,817
  13,114
  14,476
  15,900
  17,388
  18,940
  20,555
  22,236
  23,984
  25,800
  27,687
  29,649
  31,688
  33,807
  36,011
  38,304
  40,691
  43,176
  45,765
  48,464
  51,279
  54,215
  57,280
  60,482
  63,826
  67,322
  70,977
  74,800
Total equity, $m
  4,538
  5,139
  5,775
  6,447
  7,155
  7,898
  8,675
  9,487
  10,333
  11,215
  12,132
  13,085
  14,076
  15,106
  16,176
  17,289
  18,445
  19,647
  20,898
  22,201
  23,557
  24,969
  26,442
  27,977
  29,580
  31,252
  32,999
  34,823
  36,730
  38,725
  40,810
Total liabilities and equity, $m
  12,974
  14,558
  16,360
  18,264
  20,269
  22,374
  24,575
  26,875
  29,273
  31,770
  34,368
  37,069
  39,876
  42,793
  45,825
  48,977
  52,252
  55,658
  59,202
  62,892
  66,733
  70,734
  74,906
  79,256
  83,795
  88,532
  93,481
  98,649
  104,052
  109,702
  115,610
Debt-to-equity ratio
  1.410
  1.440
  1.480
  1.520
  1.550
  1.570
  1.600
  1.620
  1.640
  1.650
  1.660
  1.680
  1.690
  1.700
  1.710
  1.720
  1.720
  1.730
  1.740
  1.740
  1.750
  1.750
  1.760
  1.760
  1.760
  1.770
  1.770
  1.770
  1.780
  1.780
  1.780
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
  631
  796
  971
  1,156
  1,351
  1,555
  1,768
  1,991
  2,223
  2,465
  2,818
  3,080
  3,353
  3,637
  3,933
  4,240
  4,561
  4,895
  5,243
  5,606
  5,985
  6,381
  6,794
  7,226
  7,677
  8,150
  8,644
  9,161
  9,703
  10,271
Depreciation, amort., depletion, $m
  446
  586
  641
  700
  761
  826
  894
  964
  1,038
  1,115
  1,194
  1,138
  1,225
  1,314
  1,407
  1,504
  1,605
  1,709
  1,818
  1,931
  2,049
  2,172
  2,300
  2,434
  2,573
  2,719
  2,871
  3,030
  3,196
  3,369
  3,551
Funds from operations, $m
  1,314
  1,217
  1,438
  1,671
  1,918
  2,177
  2,448
  2,732
  3,028
  3,337
  3,659
  3,957
  4,305
  4,667
  5,044
  5,437
  5,845
  6,270
  6,713
  7,174
  7,656
  8,157
  8,681
  9,228
  9,799
  10,396
  11,020
  11,674
  12,357
  13,072
  13,822
Change in working capital, $m
  74
  -194
  -206
  -218
  -229
  -241
  -252
  -263
  -274
  -286
  -297
  -309
  -321
  -334
  -347
  -361
  -375
  -390
  -406
  -422
  -440
  -458
  -477
  -498
  -520
  -542
  -566
  -592
  -618
  -647
  -676
Cash from operations, $m
  1,240
  1,412
  1,644
  1,889
  2,147
  2,418
  2,700
  2,995
  3,303
  3,623
  3,956
  4,266
  4,626
  5,001
  5,391
  5,797
  6,220
  6,660
  7,119
  7,597
  8,095
  8,615
  9,158
  9,726
  10,319
  10,938
  11,587
  12,265
  12,975
  13,719
  14,498
Maintenance CAPEX, $m
  0
  -395
  -447
  -502
  -561
  -623
  -687
  -755
  -825
  -899
  -976
  -1,055
  -1,138
  -1,225
  -1,314
  -1,407
  -1,504
  -1,605
  -1,709
  -1,818
  -1,931
  -2,049
  -2,172
  -2,300
  -2,434
  -2,573
  -2,719
  -2,871
  -3,030
  -3,196
  -3,369
New CAPEX, $m
  -1,092
  -1,413
  -1,500
  -1,585
  -1,669
  -1,751
  -1,833
  -1,914
  -1,996
  -2,078
  -2,162
  -2,248
  -2,336
  -2,428
  -2,523
  -2,622
  -2,726
  -2,835
  -2,950
  -3,070
  -3,197
  -3,331
  -3,472
  -3,621
  -3,778
  -3,943
  -4,118
  -4,302
  -4,497
  -4,702
  -4,918
Cash from investing activities, $m
  -1,129
  -1,808
  -1,947
  -2,087
  -2,230
  -2,374
  -2,520
  -2,669
  -2,821
  -2,977
  -3,138
  -3,303
  -3,474
  -3,653
  -3,837
  -4,029
  -4,230
  -4,440
  -4,659
  -4,888
  -5,128
  -5,380
  -5,644
  -5,921
  -6,212
  -6,516
  -6,837
  -7,173
  -7,527
  -7,898
  -8,287
Free cash flow, $m
  111
  -396
  -303
  -198
  -82
  44
  180
  327
  482
  646
  819
  962
  1,151
  1,349
  1,554
  1,768
  1,990
  2,220
  2,460
  2,708
  2,967
  3,235
  3,514
  3,805
  4,107
  4,422
  4,750
  5,092
  5,449
  5,822
  6,211
Issuance/(repayment) of debt, $m
  10
  1,111
  1,166
  1,232
  1,297
  1,361
  1,425
  1,488
  1,551
  1,616
  1,681
  1,748
  1,816
  1,888
  1,961
  2,039
  2,119
  2,204
  2,293
  2,387
  2,485
  2,589
  2,699
  2,815
  2,937
  3,065
  3,201
  3,345
  3,496
  3,655
  3,823
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
  1,111
  1,166
  1,232
  1,297
  1,361
  1,425
  1,488
  1,551
  1,616
  1,681
  1,748
  1,816
  1,888
  1,961
  2,039
  2,119
  2,204
  2,293
  2,387
  2,485
  2,589
  2,699
  2,815
  2,937
  3,065
  3,201
  3,345
  3,496
  3,655
  3,823
Total cash flow (excl. dividends), $m
  12
  714
  863
  1,034
  1,215
  1,405
  1,605
  1,814
  2,033
  2,262
  2,499
  2,710
  2,968
  3,236
  3,516
  3,806
  4,109
  4,424
  4,753
  5,095
  5,452
  5,824
  6,213
  6,619
  7,044
  7,487
  7,951
  8,436
  8,945
  9,477
  10,034
Retained Cash Flow (-), $m
  -757
  -601
  -636
  -672
  -708
  -743
  -777
  -812
  -846
  -881
  -917
  -953
  -991
  -1,030
  -1,070
  -1,112
  -1,156
  -1,203
  -1,251
  -1,302
  -1,356
  -1,413
  -1,472
  -1,536
  -1,602
  -1,672
  -1,747
  -1,825
  -1,907
  -1,994
  -2,086
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
 
  114
  227
  362
  507
  663
  828
  1,003
  1,187
  1,380
  1,582
  1,756
  1,977
  2,206
  2,445
  2,694
  2,953
  3,222
  3,502
  3,793
  4,096
  4,412
  4,741
  5,084
  5,441
  5,815
  6,204
  6,612
  7,037
  7,483
  7,948
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
 
  105
  190
  275
  345
  401
  440
  463
  471
  465
  446
  409
  374
  334
  292
  248
  207
  168
  133
  102
  77
  56
  40
  28
  19
  12
  8
  5
  3
  2
  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 19.3
Price to Sales 2.5
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 9.8
Price to Free Cash Flow 82.4
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 13.2% 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 228.178 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 $12.2 billion.

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COMPANY NEWS

▶ 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]
▶ Norwegian Cruise Line beats Street 2Q forecasts   [Aug-08-17 05:22PM  Associated Press]
▶ [$$] Why Royal Caribbean Tops Carnival, Norwegian   [Jul-21-17 02:04PM  Barrons.com]
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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