Carnival Corporation: Significantly Overvalued

Summary:

  • Although consumers are searching for vacation experiences rather than destinations only, Carnival Corporation & plc. (CCL) has struggled to provide value for investors over the last decade.
  • Carnival Corporation & plc. (CCL) is significantly overvalued and poses a risk for investment due to high debt levels and struggling fundamentals post-pandemic.
  • CCL’s key fundamentals, such as ROIC, WACC, ROE, and ROA, indicate a weak financial position compared to peers like RCL.
  • Based on a discounted cash flow model, fair value for CCL is estimated to be significantly lower than the current share price.

Caribbean cruise

Joel Carillet

Investment Thesis

I recently discussed a fundamental analysis on a competitor in the same sector of Carnival Corporation & plc (NYSE:CCL), Royal Caribbean Cruises Ltd. (RCL). When I evaluated RCL, in the article


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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