Norwegian Cruise Line Holdings Ltd Valuation – January 2019 $NCLH

Company Profile (excerpt from Reuters): Norwegian Cruise Line Holdings Ltd. (NCLH), incorporated on February 21, 2011, 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.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NCLH – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,517,052,862 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.24 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 867.56% Pass
6. Moderate PEmg Ratio PEmg < 20 14.73 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.72 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.24 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.53 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.24
MG Growth Estimate 15.00%
MG Value $124.92
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $47.05
MG Value based on 0% Growth $27.58
Market Implied Growth Rate 3.12%
Current Price $47.81
% of Intrinsic Value 38.27%

Norwegian Cruise Line Holdings Ltd does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.95 in 2014 to an estimated $3.24 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.12% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Norwegian Cruise Line Holdings Ltd revealed the company was trading below its Graham Number of $49.62. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 14.73, which was below the industry average of 29.4, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-37.67.

Norwegian Cruise Line Holdings Ltd receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$37.67
Graham Number $49.62
PEmg 14.73
Current Ratio 0.24
PB Ratio 1.72
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $727,408,000
Total Current Liabilities $3,052,179,000
Long-Term Debt $5,875,252,000
Total Assets $15,316,122,000
Intangible Assets $2,241,747,000
Total Liabilities $9,118,032,000
Shares Outstanding (Diluted Average) 222,753,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.35
Dec2017 $3.31
Dec2016 $2.78
Dec2015 $1.86
Dec2014 $1.62
Dec2013 $0.49
Dec2012 $0.94
Dec2011 $0.62
Dec2010 $0.13
Dec2009 $0.33

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.24
Dec2017 $2.47
Dec2016 $1.87
Dec2015 $1.32
Dec2014 $0.95
Dec2013 $0.58
Dec2012 $0.55
Dec2011 $0.31
Dec2010 $0.13
Dec2009 $0.11

Recommended Reading:

Other ModernGraham posts about the company

Norwegian Cruise Line Holdings Ltd Valuation – Initial Coverage $NCLH

Other ModernGraham posts about related companies

Wyndham Worldwide Corp Valuation – May 2018 $WYN
Carnival Corp Valuation – April 2018 $CCL
Marriott International Inc Valuation – March 2018 $MAR
Norwegian Cruise Line Holdings Ltd Valuation – Initial Coverage $NCLH
Wyndham Worldwide Corp Valuation – January 2017 $WYN
ILG Inc Valuation – Initial Coverage $ILG
Starwood Hotels & Resorts Worldwide Inc Valuation – August 2016 $HOT
Carnival Corp Valuation – July 2016 $CCL
Marriott International Inc Valuation – July 2016 $MAR
Starwood Hotels & Resorts Worldwide Inc. Analysis – July 2015 Update $HOT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Norwegian Cruise Line Holdings Ltd Valuation – Initial Coverage $NCLH

Company Profile (excerpt from Reuters): Norwegian Cruise Line Holdings Ltd. (NCLH), incorporated on February 21, 2011, 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.

NCLH Chart

NCLH data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NCLH – March 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,839,734,154 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.21 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 160.99% Pass
6. Moderate PEmg Ratio PEmg < 20 16.08 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.12 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.21 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.89 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.29
MG Growth Estimate 15.00%
MG Value $126.59
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $47.68
MG Value based on 0% Growth $27.95
Market Implied Growth Rate 3.79%
Current Price $52.87
% of Intrinsic Value 41.77%

Norwegian Cruise Line Holdings Ltd does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.96 in 2014 to an estimated $3.29 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.79% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Norwegian Cruise Line Holdings Ltd revealed the company was trading above its Graham Number of $50.36. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 16.08, which was below the industry average of 29.67, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-34.

Norwegian Cruise Line Holdings Ltd receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$34.00
Graham Number $50.36
PEmg 16.08
Current Ratio 0.21
PB Ratio 2.12
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $518,337,000
Total Current Liabilities $2,490,021,000
Long-Term Debt $5,688,392,000
Total Assets $14,094,869,000
Intangible Assets $2,261,357,000
Total Liabilities $8,345,103,000
Shares Outstanding (Diluted Average) 230,202,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.48
Dec2017 $3.31
Dec2016 $2.78
Dec2015 $1.86
Dec2014 $1.62
Dec2013 $0.49
Dec2012 $0.94
Dec2011 $0.71
Dec2010 $0.13
Dec2009 $3.21

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.29
Dec2017 $2.47
Dec2016 $1.87
Dec2015 $1.32
Dec2014 $0.96
Dec2013 $0.79
Dec2012 $0.96
Dec2011 $0.91
Dec2010 $0.90
Dec2009 $1.07

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

Other ModernGraham posts about related companies

Wyndham Worldwide Corp Valuation – January 2017 $WYN
ILG Inc Valuation – Initial Coverage $ILG
Starwood Hotels & Resorts Worldwide Inc Valuation – August 2016 $HOT
Carnival Corp Valuation – July 2016 $CCL
Marriott International Inc Valuation – July 2016 $MAR
Starwood Hotels & Resorts Worldwide Inc. Analysis – July 2015 Update $HOT
Carnival Corporation Annual Valuation – 2015 $CCL
Marriott International Inc. Annual Valuation – 2015 $MAR
Wyndham Worldwide Corporation Annual Valuation – 2014 $WYN
Starwood Hotels & Resorts Annual Valuation – 2014 $HOT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Royal Caribbean Cruises Ltd Valuation – March 2019 #RCL

Company Profile (excerpt from Reuters): Royal Caribbean Cruises Ltd., incorporated on July 23, 1985, is a cruise company. The Company owns and operates three global cruise brands: Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises (Global Brands). The Company also own joint venture interest in the German brand TUI Cruises, interest in the Spanish brand Pullmantur and interest in the Chinese brand SkySea Cruises (collectively, Partner Brands). Together, its Global Brands and its Partner Brands operate a combined total of 50 ships in the cruise vacation industry with an aggregate capacity of approximately 123,270 berths, as of December 31, 2016. As of July 31, 2018, the Company’s ships offer a selection of itineraries that call on approximately 540 destinations in 105 countries, covering all seven continents.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of RCL – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $24,317,988,750 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.17 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 396.93% Pass
6. Moderate PEmg Ratio PEmg < 20 14.42 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.20 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.17 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.42 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $8.06
MG Growth Estimate 15.00%
MG Value $310.46
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $116.93
MG Value based on 0% Growth $68.54
Market Implied Growth Rate 2.96%
Current Price $116.25
% of Intrinsic Value 37.44%

Royal Caribbean Cruises Ltd does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.54 in 2015 to an estimated $8.06 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.96% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Royal Caribbean Cruises Ltd revealed the company was trading above its Graham Number of $108.51. The company pays a dividend of $2.6 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.42, which was below the industry average of 31.69, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-73.

Royal Caribbean Cruises Ltd receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$73.00
Graham Number $108.51
PEmg 14.42
Current Ratio 0.17
PB Ratio 2.20
Current Dividend $2.60
Dividend Yield 2.24%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,242,044,000
Total Current Liabilities $7,112,165,000
Long-Term Debt $8,355,370,000
Total Assets $27,698,270,000
Intangible Assets $1,378,353,000
Total Liabilities $16,592,809,000
Shares Outstanding (Diluted Average) 210,297,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.85
Dec2018 $8.56
Dec2017 $7.53
Dec2016 $5.93
Dec2015 $3.02
Dec2014 $3.43
Dec2013 $2.14
Dec2012 $0.08
Dec2011 $2.77
Dec2010 $2.37
Dec2009 $0.75
Dec2008 $2.68
Dec2007 $2.82
Dec2006 $2.94
Dec2005 $3.26
Dec2004 $2.26
Dec2003 $1.42
Dec2002 $1.79
Dec2001 $1.32
Dec2000 $2.31
Dec1999 $2.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.06
Dec2018 $6.68
Dec2017 $5.30
Dec2016 $3.76
Dec2015 $2.54
Dec2014 $2.26
Dec2013 $1.65
Dec2012 $1.52
Dec2011 $2.25
Dec2010 $2.10
Dec2009 $2.14
Dec2008 $2.82
Dec2007 $2.77
Dec2006 $2.61
Dec2005 $2.30
Dec2004 $1.82
Dec2003 $1.66

Recommended Reading:

Other ModernGraham posts about the company

Royal Caribbean Cruises Ltd Valuation – Initial Coverage June 2018 $RCL

Other ModernGraham posts about related companies

Hilton Worldwide Holdings Inc Valuation – February 2019 $HLT
Carnival Corp Valuation – February 2019 $CCL
Marriott International Inc Valuation – January 2019 $MAR
Norwegian Cruise Line Holdings Ltd Valuation – January 2019 $NCLH
Wyndham Worldwide Corp Valuation – May 2018 $WYN
Carnival Corp Valuation – April 2018 $CCL
Marriott International Inc Valuation – March 2018 $MAR
Norwegian Cruise Line Holdings Ltd Valuation – Initial Coverage $NCLH
Wyndham Worldwide Corp Valuation – January 2017 $WYN
ILG Inc Valuation – Initial Coverage $ILG

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Hilton Worldwide Holdings Inc Valuation – February 2019 $HLT

Company Profile (excerpt from Reuters): Hilton Worldwide Holdings Inc., incorporated on March 18, 2010, is a hospitality company. The Company is engaged in owning, leasing, managing and franchising hotels and resorts. The Company’s segments include ownership, and management and franchise. As of December 31, 2016, the Company owned, leased, managed or franchised 4,875 hotel and resort properties, totaling 796,440 rooms in 104 countries and territories. Its brand portfolio includes Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio-A Collection by Hilton, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HLT – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $23,940,242,250 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.76 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 281.62% Pass
6. Moderate PEmg Ratio PEmg < 20 29.32 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 43.81 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.76 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -11.50 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.79
MG Growth Estimate 2.12%
MG Value $35.55
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $40.44
MG Value based on 0% Growth $23.70
Market Implied Growth Rate 10.41%
Current Price $81.75
% of Intrinsic Value 229.93%

Hilton Hotels Corporation Common Stock does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.44 in 2015 to an estimated $2.79 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.41% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Hilton Hotels Corporation Common Stock revealed the company was trading above its Graham Number of $11.44. The company pays a dividend of $0.6 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 29.32, which was below the industry average of 31.44, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-38.31.

Hilton Hotels Corporation Common Stock scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$38.31
Graham Number $11.44
PEmg 29.32
Current Ratio 0.76
PB Ratio 43.81
Current Dividend $0.60
Dividend Yield 0.73%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,983,000,000
Total Current Liabilities $2,615,000,000
Long-Term Debt $7,266,000,000
Total Assets $13,995,000,000
Intangible Assets $11,316,000,000
Total Liabilities $13,437,000,000
Shares Outstanding (Diluted Average) 299,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.11
Dec2018 $2.50
Dec2017 $3.32
Dec2016 $1.03
Dec2015 $4.26
Dec2014 $2.05
Dec2013 $1.35
Dec2012 $1.14
Dec2011 $0.81
Dec2010 $0.39

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.79
Dec2018 $2.63
Dec2017 $2.60
Dec2016 $2.15
Dec2015 $2.44
Dec2014 $1.41
Dec2013 $0.97
Dec2012 $0.67
Dec2011 $0.37
Dec2010 $0.13

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

Other ModernGraham posts about related companies

Carnival Corp Valuation – February 2019 $CCL
Marriott International Inc Valuation – January 2019 $MAR
Norwegian Cruise Line Holdings Ltd Valuation – January 2019 $NCLH
Wyndham Worldwide Corp Valuation – May 2018 $WYN
Carnival Corp Valuation – April 2018 $CCL
Marriott International Inc Valuation – March 2018 $MAR
Norwegian Cruise Line Holdings Ltd Valuation – Initial Coverage $NCLH
Wyndham Worldwide Corp Valuation – January 2017 $WYN
ILG Inc Valuation – Initial Coverage $ILG
Starwood Hotels & Resorts Worldwide Inc Valuation – August 2016 $HOT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Carnival Corp Valuation – February 2019 $CCL

Company Profile (excerpt from Reuters): Carnival Corporation, incorporated on November 21, 1974, is a leisure travel company. The Company is a cruise company of global cruise guests, and a provider of vacations to all cruise destinations throughout the world. The Company operates in four segments: North America, EAA, Cruise Support and, Tour and Other. As of November 30, 2016, the Company operated over 100 cruise ships within a portfolio of global, regional and national cruise brands that sell cruise products, services and vacation experiences in all the vacation geographic areas. The Company’s North America segment includes Carnival Cruise Line, Holland America Line, Princess Cruises (Princess) and Seabourn. The Company’s EAA segment includes AIDA Cruises (AIDA), Costa Cruises (Costa), Cunard, P&O Cruises (Australia), P&O Cruises (the United Kingdom) and ship operations of Fathom. The Company’s Cruise Support segment represents certain of its port and related facilities and other services that are provided for the benefit of its cruise brands and Fathom’s selling, general and administrative expenses. The Company’s Tour and Other segment represents the hotel and transportation operations of Holland America Princess Alaska Tours and three ships that the Company bareboat charter to unaffiliated entities.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CCL – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $39,817,043,115 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.24 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 93.60% Pass
6. Moderate PEmg Ratio PEmg < 20 14.07 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.65 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.24 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.13 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.11
MG Growth Estimate 15.00%
MG Value $158.06
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $59.53
MG Value based on 0% Growth $34.90
Market Implied Growth Rate 2.79%
Current Price $57.78
% of Intrinsic Value 36.56%

Carnival Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.83 in 2015 to an estimated $4.11 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.79% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Carnival Corp revealed the company was trading below its Graham Number of $59.51. The company pays a dividend of $1.95 per share, for a yield of 3.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.07, which was below the industry average of 31.44, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-22.48.

Carnival Corp performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$22.48
Graham Number $59.51
PEmg 14.07
Current Ratio 0.24
PB Ratio 1.65
Current Dividend $1.95
Dividend Yield 3.37%
Number of Consecutive Years of Dividend Growth 4

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 11/1/2018
Total Current Assets $2,225,000,000
Total Current Liabilities $9,204,000,000
Long-Term Debt $7,897,000,000
Total Assets $42,401,000,000
Intangible Assets $4,101,000,000
Total Liabilities $17,958,000,000
Shares Outstanding (Diluted Average) 700,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.67
Nov2018 $4.44
Nov2017 $3.59
Nov2016 $3.72
Nov2015 $2.26
Nov2014 $1.56
Nov2013 $1.36
Nov2012 $1.67
Nov2011 $2.42
Nov2010 $2.47
Nov2009 $2.24
Nov2008 $2.90
Nov2007 $2.95
Nov2006 $2.77
Nov2005 $2.70
Nov2004 $2.24
Nov2003 $1.62
Nov2002 $1.68
Nov2001 $1.57
Nov2000 $1.60
Nov1999 $1.66

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.11
Nov2018 $3.59
Nov2017 $2.94
Nov2016 $2.45
Nov2015 $1.83
Nov2014 $1.70
Nov2013 $1.86
Nov2012 $2.19
Nov2011 $2.50
Nov2010 $2.58
Nov2009 $2.66
Nov2008 $2.82
Nov2007 $2.67
Nov2006 $2.42
Nov2005 $2.15
Nov2004 $1.83
Nov2003 $1.63

Recommended Reading:

Other ModernGraham posts about the company

Carnival Corp Valuation – April 2018 $CCL
Carnival Corp Valuation – July 2016 $CCL
5 Speculative and Overvalued Companies to Avoid – May 2015
Carnival Corporation Annual Valuation – 2015 $CCL
14 Companies in the Spotlight This Week – 4/12/14

Other ModernGraham posts about related companies

Wyndham Worldwide Corp Valuation – May 2018 $WYN
Carnival Corp Valuation – April 2018 $CCL
Marriott International Inc Valuation – March 2018 $MAR
Norwegian Cruise Line Holdings Ltd Valuation – Initial Coverage $NCLH
Wyndham Worldwide Corp Valuation – January 2017 $WYN
ILG Inc Valuation – Initial Coverage $ILG
Starwood Hotels & Resorts Worldwide Inc Valuation – August 2016 $HOT
Carnival Corp Valuation – July 2016 $CCL
Marriott International Inc Valuation – July 2016 $MAR
Starwood Hotels & Resorts Worldwide Inc. Analysis – July 2015 Update $HOT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Marriott International Inc Valuation – January 2019 $MAR

Company Profile (excerpt from Reuters): Marriott International, Inc. (Marriott International), incorporated on September 19, 1997, is a lodging company. As of December 31, 2017, the Company operated, franchised, or licensed 6,520 properties across the world, with 1,257,666 rooms. Marriott International operates in three business segments: North American Full-Service, North American Limited-Service and International. Its North American Full-Service segment includes its Luxury and Premium brands (JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, EDITION, Marriott Hotels, Westin, Renaissance Hotels, Le Meridien, Autograph Collection Hotels, Delta Hotels, Gaylord Hotels, and Tribute Portfolio) located in the United States and Canada. Its North American Limited-Service segment includes Select brands (Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, Four Points, TownePlace Suites, Aloft Hotels, AC Hotels by Marriott, Element Hotels, and Moxy Hotels) located in the United States and Canada. Its International segment includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, EDITION, Bulgari Hotels & Resorts, Marriott Hotels, Westin, Renaissance Hotels, Le Meridien, Autograph Collection Hotels, Marriott Executive Apartments, Tribute Portfolio, Courtyard, Residence Inn, Fairfield Inn & Suites, Four Points, Aloft Hotels, AC Hotels by Marriott, Protea Hotels, Element Hotels, and Moxy Hotels located outside the United States and Canada. It also operates, markets, and develops residential properties and provides services to home/condominium owner associations.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MAR – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $37,827,905,491 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.46 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 1363.29% Pass
6. Moderate PEmg Ratio PEmg < 20 28.80 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 16.73 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.46 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.68 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.85
MG Growth Estimate 15.00%
MG Value $148.23
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $55.83
MG Value based on 0% Growth $32.73
Market Implied Growth Rate 10.15%
Current Price $110.89
% of Intrinsic Value 74.81%

Marriott International Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.88 in 2014 to an estimated $3.85 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 10.15% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Marriott International Inc revealed the company was trading above its Graham Number of $35.23. The company pays a dividend of $1.29 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 28.8, which was below the industry average of 29.4, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-53.35.

Marriott International Inc receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$53.35
Graham Number $35.23
PEmg 28.80
Current Ratio 0.46
PB Ratio 16.73
Current Dividend $1.29
Dividend Yield 1.16%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $2,803,000,000
Total Current Liabilities $6,051,000,000
Long-Term Debt $8,710,000,000
Total Assets $23,833,000,000
Intangible Assets $17,470,000,000
Total Liabilities $21,509,000,000
Shares Outstanding (Diluted Average) 350,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.31
Dec2017 $3.61
Dec2016 $2.64
Dec2015 $3.15
Dec2014 $2.54
Dec2013 $2.00
Dec2012 $1.72
Dec2011 $0.55
Dec2010 $1.21
Dec2009 -$0.97
Dec2008 $0.98
Dec2007 $1.73
Dec2006 $1.40
Dec2005 $1.43
Dec2004 $1.23
Dec2003 $1.01
Dec2002 $0.54
Dec2001 $0.46
Dec2000 $0.93
Dec1999 $0.74
Dec1998 $0.72

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.85
Dec2017 $3.01
Dec2016 $2.61
Dec2015 $2.39
Dec2014 $1.88
Dec2013 $1.33
Dec2012 $0.90
Dec2011 $0.56
Dec2010 $0.66
Dec2009 $0.57
Dec2008 $1.34
Dec2007 $1.47
Dec2006 $1.26
Dec2005 $1.11
Dec2004 $0.91
Dec2003 $0.75
Dec2002 $0.64

Recommended Reading:

Other ModernGraham posts about the company

Marriott International Inc Valuation – March 2018 $MAR
Marriott International Inc Valuation – July 2016 $MAR
24 Companies in the Spotlight This Week – 3/28/15
Marriott International Inc. Annual Valuation – 2015 $MAR
17 Companies in the Spotlight This Week – 3/22/14

Other ModernGraham posts about related companies

Wyndham Worldwide Corp Valuation – May 2018 $WYN
Carnival Corp Valuation – April 2018 $CCL
Marriott International Inc Valuation – March 2018 $MAR
Norwegian Cruise Line Holdings Ltd Valuation – Initial Coverage $NCLH
Wyndham Worldwide Corp Valuation – January 2017 $WYN
ILG Inc Valuation – Initial Coverage $ILG
Starwood Hotels & Resorts Worldwide Inc Valuation – August 2016 $HOT
Carnival Corp Valuation – July 2016 $CCL
Marriott International Inc Valuation – July 2016 $MAR
Starwood Hotels & Resorts Worldwide Inc. Analysis – July 2015 Update $HOT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Wyndham Worldwide Corp Valuation – May 2018 $WYN

Company Profile (excerpt from Reuters): Wyndham Worldwide Corporation, incorporated on May 30, 2003, is a hospitality company. The Company offers a range of hospitality services and products through its global portfolio of brands. The Company operates through three segments: Wyndham Hotel Group, Wyndham Destination Network and Wyndham Vacation Ownership. The Company’s brands include Wyndham Hotels and Resorts, Ramada, Days Inn, Super 8, Howard Johnson, Wingate by Wyndham, Microtel Inns & Suites by Wyndham, TRYP by Wyndham, Dolce Hotels and Resorts, RCI, Landal GreenParks, Novasol, Hoseasons, cottages.com, James Villa Holidays, Wyndham Vacation Rentals, Wyndham Vacation Resorts, Shell Vacations Club and WorldMark by Wyndham.

WYN Chart

WYN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WYN – May 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,908,073,034 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.17 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 236.63% Pass
6. Moderate PEmg Ratio PEmg < 20 16.13 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 12.37 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.17 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 13.38 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.59
MG Growth Estimate 15.00%
MG Value $253.72
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $95.56
MG Value based on 0% Growth $56.02
Market Implied Growth Rate 3.82%
Current Price $106.30
% of Intrinsic Value 41.90%

Wyndham Worldwide Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.27 in 2014 to an estimated $6.59 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.82% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Wyndham Worldwide Corporation revealed the company was trading above its Graham Number of $36.78. The company pays a dividend of $2.32 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.13, which was below the industry average of 22.89, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-64.2.

Wyndham Worldwide Corporation receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$64.20
Graham Number $36.78
PEmg 16.13
Current Ratio 1.17
PB Ratio 12.37
Current Dividend $2.32
Dividend Yield 2.18%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $2,964,000,000
Total Current Liabilities $2,539,000,000
Long-Term Debt $5,686,000,000
Total Assets $10,403,000,000
Intangible Assets $2,420,000,000
Total Liabilities $9,525,000,000
Shares Outstanding (Diluted Average) 102,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.84
Dec2017 $8.40
Dec2016 $5.53
Dec2015 $5.14
Dec2014 $4.18
Dec2013 $3.21
Dec2012 $2.75
Dec2011 $2.51
Dec2010 $2.05
Dec2009 $1.61
Dec2008 -$6.05
Dec2007 $2.20
Dec2006 $1.44
Dec2005 $2.15
Dec2004 $1.74
Dec2003 $1.49
Dec2002 $1.54

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.59
Dec2017 $6.07
Dec2016 $4.66
Dec2015 $4.00
Dec2014 $3.27
Dec2013 $2.69
Dec2012 $1.81
Dec2011 $1.05
Dec2010 $0.29
Dec2009 -$0.30
Dec2008 -$0.74
Dec2007 $1.88
Dec2006 $1.70
Dec2005 $1.68
Dec2004 $1.29
Dec2003 $0.91
Dec2002 $0.51

Recommended Reading:

Other ModernGraham posts about the company

Wyndham Worldwide Corp Valuation – January 2017 $WYN
Wyndham Worldwide Corporation Analysis – August 2015 Update $WYN
19 Companies to Research This Week – 8/23/14
Wyndham Worldwide Corporation Annual Valuation – 2014 $WYN

Other ModernGraham posts about related companies

Carnival Corp Valuation – April 2018 $CCL
Marriott International Inc Valuation – March 2018 $MAR
Norwegian Cruise Line Holdings Ltd Valuation – Initial Coverage $NCLH
Wyndham Worldwide Corp Valuation – January 2017 $WYN
ILG Inc Valuation – Initial Coverage $ILG
Starwood Hotels & Resorts Worldwide Inc Valuation – August 2016 $HOT
Carnival Corp Valuation – July 2016 $CCL
Marriott International Inc Valuation – July 2016 $MAR
Starwood Hotels & Resorts Worldwide Inc. Analysis – July 2015 Update $HOT
Carnival Corporation Annual Valuation – 2015 $CCL

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Carnival Corp Valuation – April 2018 $CCL

Company Profile (excerpt from Reuters): Carnival Corporation, incorporated on November 21, 1974, is a leisure travel company. The Company is a cruise company of global cruise guests, and a provider of vacations to all cruise destinations throughout the world. The Company operates in four segments: North America, EAA, Cruise Support and, Tour and Other. As of November 30, 2016, the Company operated over 100 cruise ships within a portfolio of global, regional and national cruise brands that sell cruise products, services and vacation experiences in all the vacation geographic areas. The Company’s North America segment includes Carnival Cruise Line, Holland America Line, Princess Cruises (Princess) and Seabourn. The Company’s EAA segment includes AIDA Cruises (AIDA), Costa Cruises (Costa), Cunard, P&O Cruises (Australia), P&O Cruises (the United Kingdom) and ship operations of Fathom. The Company’s Cruise Support segment represents certain of its port and related facilities and other services that are provided for the benefit of its cruise brands and Fathom’s selling, general and administrative expenses. The Company’s Tour and Other segment represents the hotel and transportation operations of Holland America Princess Alaska Tours and three ships that the Company bareboat charter to unaffiliated entities.

CCL Chart

CCL data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CCL – April 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $46,657,441,273 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.19 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 60.03% Pass
6. Moderate PEmg Ratio PEmg < 20 18.88 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.93 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.19 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.04 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.47
MG Growth Estimate 15.00%
MG Value $133.72
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $50.36
MG Value based on 0% Growth $29.52
Market Implied Growth Rate 5.19%
Current Price $65.58
% of Intrinsic Value 49.04%

Carnival Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.7 in 2014 to an estimated $3.47 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.19% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Carnival Corp revealed the company was trading above its Graham Number of $55.78. The company pays a dividend of $1.6 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.88, which was below the industry average of 24.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-21.41.

Carnival Corp receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$21.41
Graham Number $55.78
PEmg 18.88
Current Ratio 0.19
PB Ratio 1.93
Current Dividend $1.60
Dividend Yield 2.44%
Number of Consecutive Years of Dividend Growth 3

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 2/1/2018
Total Current Assets $1,667,000,000
Total Current Liabilities $8,851,000,000
Long-Term Debt $7,445,000,000
Total Assets $41,441,000,000
Intangible Assets $4,212,000,000
Total Liabilities $17,059,000,000
Shares Outstanding (Diluted Average) 719,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.10
Nov2017 $3.59
Nov2016 $3.72
Nov2015 $2.26
Nov2014 $1.56
Nov2013 $1.36
Nov2012 $1.67
Nov2011 $2.42
Nov2010 $2.47
Nov2009 $2.24
Nov2008 $2.90
Nov2007 $2.95
Nov2006 $2.77
Nov2005 $2.70
Nov2004 $2.24
Nov2003 $1.62
Nov2002 $1.68
Nov2001 $1.57
Nov2000 $1.60
Nov1999 $1.66
Nov1998 $1.40

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.47
Nov2017 $2.94
Nov2016 $2.45
Nov2015 $1.83
Nov2014 $1.70
Nov2013 $1.86
Nov2012 $2.19
Nov2011 $2.50
Nov2010 $2.58
Nov2009 $2.66
Nov2008 $2.82
Nov2007 $2.67
Nov2006 $2.42
Nov2005 $2.15
Nov2004 $1.83
Nov2003 $1.63
Nov2002 $1.61

Recommended Reading:

Other ModernGraham posts about the company

Carnival Corp Valuation – July 2016 $CCL
5 Speculative and Overvalued Companies to Avoid – May 2015
Carnival Corporation Annual Valuation – 2015 $CCL
14 Companies in the Spotlight This Week – 4/12/14
Carnival Corporation (CCL) Annual Valuation – 2014

Other ModernGraham posts about related companies

Norwegian Cruise Line Holdings Ltd Valuation – Initial Coverage $NCLH
Wyndham Worldwide Corp Valuation – January 2017 $WYN
ILG Inc Valuation – Initial Coverage $ILG
Starwood Hotels & Resorts Worldwide Inc Valuation – August 2016 $HOT
Carnival Corp Valuation – July 2016 $CCL
Marriott International Inc Valuation – July 2016 $MAR
Starwood Hotels & Resorts Worldwide Inc. Analysis – July 2015 Update $HOT
Carnival Corporation Annual Valuation – 2015 $CCL
Marriott International Inc. Annual Valuation – 2015 $MAR
Wyndham Worldwide Corporation Annual Valuation – 2014 $WYN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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