DCF Studio

    NCLH · NYQ · Consumer Cyclical

    Norwegian Cruise Line Holdings Ltd.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -32.96

    Market price

    USD 14.12

    Implied upside

    -333.4%

    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 28.7% of revenue against depreciation of 12.3%. 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 -32.96-333.4%
    Exit multiple
    USD 5.55-60.7%
    Market price
    USD 14.12

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -2985509985-14927549930FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 12.4bnUSD 15.8bnUSD 19.9bnUSD 25.2bnUSD 32.0bn+26.6%
    EBITUSD 317.2mUSD 401.6mUSD 508.4mUSD 643.6mUSD 814.7m+26.6%
    NOPATUSD 313.1mUSD 396.4mUSD 501.9mUSD 635.3mUSD 804.3m+26.6%
    Add depreciation & amortisationUSD 1.5bnUSD 1.9bnUSD 2.4bnUSD 3.1bnUSD 3.9bn+26.6%
    Less capital expenditureUSD -3.6bnUSD -4.5bnUSD -5.7bnUSD -7.3bnUSD -9.2bn+26.6%
    Less increase in working capitalUSD 570.8mUSD 722.6mUSD 914.8mUSD 1.2bnUSD 1.5bn-26.6%
    Free cashflow to firmUSD -1.2bnUSD -1.5bnUSD -1.9bnUSD -2.4bnUSD -3.0bn-26.6%
    Discount factor0.95810.87960.80750.74120.6805-
    Present valueUSD -1.1bnUSD -1.3bnUSD -1.5bnUSD -1.7bnUSD -2.0bn-16.2%
    Present Value Of The ForecastUSD -7.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.590Reported 1.881, pulled toward 1.0 (Blume)
    Cost of equity13.74%Risk-free + beta x equity risk premium
    Cost of debt6.88%Interest expense / average total debt
    Market capitalisationUSD 6.5bn30.7% of capital
    Total debtUSD 14.6bn69.3% of capital, book value as a proxy
    Tax rate1.3%Effective, capped at statutory
    WACC8.93%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 -32.96

    -470% of EV

    Forecast FCFF, final year
    USD -3.0bn
    Capex at depreciation, working capital in reinvestment
    USD 804.3m
    Less reinvestment at g/ROIC (27.3% of NOPAT)
    USD -219.4m
    Capitalised
    USD 584.9m
    ROIC (reported)
    9.2%
    Terminal value, undiscounted
    USD 9.3bn
    Terminal value, discounted
    USD 6.3bn
    Enterprise value
    USD -1.3bn
    Less net debt
    USD 14.4bn
    Equity value
    USD -15.7bn

    Exit at 7.7x EBITDA

    Value per shareUSD 5.55

    145% of EV

    Terminal value, undiscounted
    USD 36.4bn
    Terminal value, discounted
    USD 24.7bn
    Enterprise value
    USD 17.0bn
    Less net debt
    USD 14.4bn
    Equity value
    USD 2.7bn

    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%
    6.93%-27.64-26.96-26.15-25.15-23.88
    7.93%-30.90-30.60-30.27-29.88-29.42
    8.93%-33.15-33.06-32.96-32.85-32.74
    9.93%-34.59-34.54-34.48-34.43-34.37
    10.93%-35.64-35.59-35.54-35.49-35.45

    Outlined: this model. Green text: above today's price of 14.12. 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
    Revenue growth, every year26.6%76.4%+49.8pp
    EBIT margin2.5%9.4%+6.8pp
    Discount rate8.9%4.2%-4.8pp
    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.