Why Is Carnival’s Valuation Low Compared to Its Peers?
Carnival has a low valuation compared to its peers. Analysts are expecting the lowest EBITDA growth for CCL—related to peers RCL and NCLH—in the next four quarters.
Following Carnival’s (CCL) 4Q15 earnings release, analysts’ consensus estimates remained almost flat. Also, earnings estimates rose by 0.62% for 1Q16.
Carnival identified China as its biggest potential area of expansion. It announced that Carnival Cruise Line will enter the Chinese market in 2017.
Carnival’s (CCL) competitors include Royal Caribbean Cruises and Norwegian Cruise Line. CCL forms 3.9% of the WBI Large Cap Tactical Value Shares (WBIF).
Carnival Corporation’s 4Q15 financial report came better than most had expected. Despite a fall in revenue, CCL saw a strong surge in its earnings.
Carnival Corporation (CCL) saw a marginal fall in its top line numbers. The revenues for 4Q15 fell by about 2.5% year-over-year to reach $3.71 billion.
The stocks of Carnival Corporation (CCL) traded higher when the company released earnings that were better than expected on Friday, December 18, 2015.
Currently, CCL’s forward EV/EBITDA ratio stands at 10.4x. CCL enjoyed its highest valuation of 63x during September 2006. It reached its lows of ~5x in November 2008.
In the last three months, Carnival (CCL) has remained almost flat with a 0.42% gain.
With both ALBD and occupancy expected to increase in 4Q15, CCL management expects earnings per share for 4Q15 to be in the range of $0.36 to $0.40.
Carnival has managed to beat analyst estimates in the last 12 of 15 quarters. Even in the remaining three, it met analyst expectations.
Costs directly related to operating a cruise ship comprise ~74% of Royal Caribbean’s (RCL) total operating costs.
Royal Caribbean (RCL) offers all cruise company services, including pre- and post-hotel stay arrangements and air transportation.
Now let’s look at certain key operating metrics used in the cruising industry to evaluate operational performance.
Apart from operating the largest contemporary global brand, Royal Caribbean offers five additional brands targeting specific markets.
Royal Caribbean International is a global brand offered by Royal Caribbean (RCL). It’s one of the world’s three largest contemporary brands.
Royal Caribbean (RCL) derives revenue from two sources: passenger ticket revenue and onboard and other revenue.
Royal Caribbean’s (RCL) share price shot up considerably in 2014. RCL was the only company among the three major cruise operators to outperform the S&P 500 index throughout the year.
The cruise industry is getting more and more capital-intensive as newer, more expensive ships are introduced with better amenities.
Cruises still have a small share of the total tourism industry compared to land-based vacation alternatives. The global cruise industry had only 240,000 cabins in 2013.