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Carnival Corporation & plc analysis

Carnival Corporation & plc analysis

22 December 2021

Carnival is one of the largest travel companies in the world with a total fleet of 87 vessels. It is planned to deliver 16 new ships by 2025.

2020 was the worst year for cruise ships. Carnival was forced to suspend its operations in March 2020. It brought home more than 260,000 guests, released 90,000 crew members, processed billions of dollars of compensation for guests and cruise loans, expedited the departure of 19 ships, negotiated delays for 16 ships on order, and developed new cruise rules.

Most importantly, the company was able to restructure its debt and attract more than $19 billion in capital (almost seven of them – the blurring of minority shares through SPO).

In terms of finance, the last two years have been a perfect storm: $ 9-10 billion in losses on both net profits and free cash flow. Revenue in 2021 dropped 95% relative to 2019.


P / E and forward P / E are not considered as the company has a loss

P / B 1.3

P / S 2.5

Debt $ 32.6 billion with current operating cash flow minus $ 5.4 billion

No dividends

Share price: $ 20.5

The hope for Carnival is that from the last five quarters the revenues were from $ 26 to $ 49 million in 4th quarter. But in the last quarter the revenue was $546 million which makes a big difference. Today, the company has 31% of the capital in assets, and 69% makes a debt. The cash flow discount model shows a fair price of $14.6. Simply Wall Street estimates the company at $ 23. 8 analysts leading the company give an average estimate of $ 30.

The stock is trading near the 50-day moving average. Above the 20-day MA, and well below the 200-day. In the long term, in our opinion, the uptrend is more priority, so growth with the nearest target of $ 25 is likely.

Conclusion: it is very difficult to evaluate a company in which everything is changing so quickly and not by its will. As people made sure that the covid had been defeated, Carnival’s stock hit $ 30 despite all the losses. But with the appearance of new strains, they fell again almost twofold.

The only question is whether Carnival will be able to survive until the covid is gone, or will it go bankrupt? There is no answer, and therefore investing in such companies involves high risk to get potential high returns. The indisputable advantages of the company include its size (it is the market leader) and the revenue that has begun to grow, but it will take more than one year until the financial recovery is completed.

Long-term investors should not hold a significant part of their portfolio in such stocks.

Get advice on the company’s shares:

22 December 2021
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