DCF Studio

    CCL · NYQ · Consumer Cyclical

    Carnival Corporation Ltd.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -21.61

    Market price

    USD 21.84

    Implied upside

    -198.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 22.0% of revenue against depreciation of 12.6%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD -21.61-198.9%
    Exit multiple
    USD 20.96-4.0%
    Market price
    USD 21.84

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -4523142287-22615711440FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 34.6bnUSD 44.9bnUSD 58.2bnUSD 75.6bnUSD 98.1bn+29.8%
    EBITUSD 363.0mUSD 471.3mUSD 611.8mUSD 794.2mUSD 1.0bn+29.8%
    NOPATUSD 361.5mUSD 469.2mUSD 609.1mUSD 790.8mUSD 1.0bn+29.8%
    Add depreciation & amortisationUSD 4.4bnUSD 5.6bnUSD 7.3bnUSD 9.5bnUSD 12.4bn+29.8%
    Less capital expenditureUSD -7.6bnUSD -9.9bnUSD -12.8bnUSD -16.6bnUSD -21.6bn+29.8%
    Less increase in working capitalUSD 1.3bnUSD 1.7bnUSD 2.2bnUSD 2.8bnUSD 3.6bn-29.8%
    Free cashflow to firmUSD -1.6bnUSD -2.1bnUSD -2.7bnUSD -3.5bnUSD -4.5bn-29.8%
    Discount factor0.95210.86290.78220.70900.6426-
    Present valueUSD -1.5bnUSD -1.8bnUSD -2.1bnUSD -2.5bnUSD -2.9bn-17.7%
    Present Value Of The ForecastUSD -10.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.879Reported 2.312, pulled toward 1.0 (Blume)
    Cost of equity15.33%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 29.9bn51.7% of capital
    Total debtUSD 28.0bn48.3% of capital, book value as a proxy
    Tax rate0.4%Effective, capped at statutory
    WACC10.33%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD -21.61

    -155% of EV

    Forecast FCFF, final year
    USD -4.5bn
    Capex at depreciation, working capital in reinvestment
    USD 1.0bn
    Less reinvestment at g/ROIC (24.2% of NOPAT)
    USD -248.5m
    Capitalised
    USD 778.0m
    ROIC (WACC floor)
    10.3%
    Terminal value, undiscounted
    USD 10.2bn
    Terminal value, discounted
    USD 6.5bn
    Enterprise value
    USD -4.2bn
    Less net debt
    USD 26.1bn
    Equity value
    USD -30.3bn

    Exit at 7.7x EBITDA

    Value per shareUSD 20.96

    119% of EV

    Terminal value, undiscounted
    USD 103.1bn
    Terminal value, discounted
    USD 66.2bn
    Enterprise value
    USD 55.5bn
    Less net debt
    USD 26.1bn
    Equity value
    USD 29.4bn

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.33%-20.27-20.15-20.02-19.87-19.69
    9.33%-21.11-21.06-21.02-20.97-20.92
    10.33%-21.65-21.63-21.61-21.58-21.56
    11.33%-22.04-22.02-22.00-21.98-21.96
    12.33%-22.33-22.31-22.29-22.27-22.26

    Outlined: this model. Green text: above today's price of 21.84. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    EBIT margin1.1%8.2%+7.1pp
    Discount rate10.3%3.5%-6.9pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.