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Category: Carnival Corporation (CCL)
Date: 21 September 2020 Stock Price of Carnival Corporation (CCL): $15.31 We take a look at the 3rd quarter earnings release of their 2020 fiscal year of Carnival Corporation the world's largest leisure travel company. The stock of Carnival has been hammered by the impact of the coronavirus and its impact on global travel and the tourism industry. The group reported they expect to burn $650 million in cash in the 2nd half of their 2020 fiscal year as business will be slow to pick up. For the 3rd quarter the group reported a net loss of -$1.7 billion
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Just six months after we paused cruise operations across our global fleet, this past weekend, we successfully completed our first seven day cruise on our Italian brand Costa. Soon a second of our nine World's Leading Cruise Lines' brands will resume guest operations, our German sourced brand AIDA"
About Carnival Corporation
Carnival Corporation & plc, the world’s largest leisure travel company, provides travelers around the globe with extraordinary vacations at an exceptional value. The company’s portfolio of global cruise line brands includes Carnival Cruise Line, Holland America Line, Princess Cruises and Seabourn in North America; P&O Cruises (UK) and Cunard in Southampton, England; AIDA Cruises in Rostock, Germany; Costa Cruises in Genoa, Italy; and P&O Cruises (Australia) in Sydney. Additionally, Carnival Corporation owns a tour company that complements its cruise operations: Holland America Princess Alaska Tours which operates in Alaska and the Yukon.
Together, these brands comprise the world’s largest cruise company with a fleet of 102 ships visiting more than 700 ports around the world. A total of 19 new ships are scheduled to be delivered to Carnival Corporation between 2017 and 2022.
Carnival Corporation employs over 120,000 people worldwide and its 10 cruise line brands attract nearly 11.5 million guests annually, which is about 50 percent of the global cruise market. Combining more than 225,000 daily cruise guests and 100,000 shipboard employees, more than 325,000 people are sailing aboard the Carnival Corporation fleet every single day, totaling about 85 million passenger cruise days a year.
Carnival Corporation’s 10 leading brands offer a wide range of vacation experiences for millions of guests with varied leisure-time preferences from multiple backgrounds, cultures and languages. The company’s broad product offerings appeal to travelers of all kinds with many preferences, and consistently provide extraordinary vacation experiences at an outstanding value, especially when compared to similar land-based vacation options.
Quick facts about Carnival Corporation (CCL)
For more about Carnival Corporation read here
Together, these brands comprise the world’s largest cruise company with a fleet of 102 ships visiting more than 700 ports around the world. A total of 19 new ships are scheduled to be delivered to Carnival Corporation between 2017 and 2022.
Carnival Corporation employs over 120,000 people worldwide and its 10 cruise line brands attract nearly 11.5 million guests annually, which is about 50 percent of the global cruise market. Combining more than 225,000 daily cruise guests and 100,000 shipboard employees, more than 325,000 people are sailing aboard the Carnival Corporation fleet every single day, totaling about 85 million passenger cruise days a year.
Carnival Corporation’s 10 leading brands offer a wide range of vacation experiences for millions of guests with varied leisure-time preferences from multiple backgrounds, cultures and languages. The company’s broad product offerings appeal to travelers of all kinds with many preferences, and consistently provide extraordinary vacation experiences at an outstanding value, especially when compared to similar land-based vacation options.
Quick facts about Carnival Corporation (CCL)
- Carnival Corporation is listed on the New York Stock Exchange under share code ticker: CCL
- Number of employees: 150 000
- Passengers Carried (in thousands) :12,900
- Passenger Capacity :249,000 lower births
- Number of Ships: 104
- Revenues in 2019: $20.825 billion
- Earnings per share in 2019: $4.32
- Shares in issue: 692 million
- Dividends paid per share in 2019: $2.00
- Stockholders equity in Carnival Corporation: $25.365 billion
- Stockholders equity per share: $36.65
For more about Carnival Corporation read here
Overview of Carnival Corporation's 3rd quarter 2020 earnings report
- U.S. GAAP net loss of $(2.9) billion for the third quarter of 2020, which includes $0.9 billion of non-cash impairment charges.
- Third quarter 2020 adjusted net loss of $(1.7) billion.
- Cash burn rate in the third quarter 2020 and the expected rate for the fourth quarter are both in line with the previously disclosed expectation.
- Third quarter 2020 ended with $8.2 billion of cash and cash equivalents. The company expects to further enhance future liquidity, opportunistically.
- Costa successfully resumed guest cruise operations on September 6, 2020.
- AIDA has announced plans to restart guest cruise operations during the fall 2020.
- A total of 18 less efficient ships have left or are expected to leave the fleet, representing approximately 12 percent of pre-pause capacity and only three percent of operating income in 2019. •
- Cumulative advanced bookings for the second half of 2021 capacity currently available for sale are at the higher end of the historical range, despite minimal advertising or marketing.
Carnival Corporation' management commentary on their 3rd quarter 2020 earnings report
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald noted, "Just six months after we paused cruise operations across our global fleet, this past weekend, we successfully completed our first seven day cruise on our Italian brand Costa. Soon a second of our nine World's Leading Cruise Lines' brands will resume guest operations, our German sourced brand AIDA. Our business relies solely on leisure travel which we believe has historically proven to be far more resilient than business travel and cannot be easily replaced with video conferencing and other means of technology. Our portfolio includes many regional brands which clearly position us well for a staggered return to service in the current environment. We continue to take aggressive action to emerge a leaner more efficient company. We are accelerating the exit of 18 less efficient ships from our fleet. This will generate a 12% reduction in capacity and a structurally lower cost base, while retaining the most cash generative assets in our portfolio. With two thirds of our guests repeat cruisers each year, we believe the reduction in capacity leaves us well positioned to take advantage of the proven resiliency of, and the pent up demand for cruise travel - as evidenced by our being at the higher end of historical booking curves for the second half of 2021. We will emerge with a more efficient fleet, with a stretched out newbuild order book and having paused new ship orders, leaving us with no deliveries in 2024 and only one delivery in 2025, allowing us to pay down debt and create increasing value for our shareholders.”
Resumption of Guest Operations
In the face of the global impact of COVID-19, the company paused its guest cruise operations in mid-March. The company resumed limited guest operations on September 6, 2020, with Costa Cruises' ("Costa") successful voyage visiting five destinations in Italy. The company plans to continue the limited resumption of its guest cruise operations with additional Costa ships over September and October, as well as with AIDA Cruises' ("AIDA") during the fall 2020. These brands are beginning the company's anticipated gradual, phased-in resumption of guest cruise operations. The initial cruises will continue to take place with adjusted passenger capacity and enhanced health protocols developed with government and health authorities, and guidance from our roster of medical and scientific experts. Other brands and ships are expected to return to service over time to provide guests with unmatched joyful vacations in a manner consistent with the company's highest priorities, which are compliance, environmental protection and the health, safety and well-being of its guests, crew, shoreside employees and the people in the communities its ships visit. Many of the company's brands source the majority of their guests from the geographical region in which they operate. In the current environment, the company believes this will benefit it in resuming guest cruise operations.
Update on Bookings
While the company believes bookings in the first half of 2021 reflect expectations of the phased resumption of its guest cruise operations and anticipated itinerary changes, as of August 31, 2020, cumulative advanced bookings for the second half of 2021 capacity currently available for sale are at the higher end of the historical range and similar to where booking positions were in 2018 for the second half of 2019. The company believes this demonstrates the long-term potential demand for cruising. Pricing on these bookings are lower by mid-single digits versus the second half of 2019, on a comparable basis, reflecting the effect of future cruise credits ("FCC") from previously cancelled cruises being applied. The company continues to take bookings for both 2021 and 2022. The company is providing flexibility to guests with bookings on sailings cancelled by allowing guests to receive enhanced FCCs or elect to receive refunds in cash. Enhanced FCCs increase the value of the guest's original booking or provide incremental onboard credits. As of August 31, 2020, approximately 45 percent of guests affected by the company's schedule changes have received enhanced FCCs and approximately 55 percent have requested refunds. Total customer deposits balance at August 31, 2020, was $2.4 billion, the majority of which are FCCs, compared to total customer deposits balance of $2.9 billion at May 31, 2020. The decline in customer deposits is consistent with previous expectations. As of August 31, 2020, the current portion of customer deposits was $2.1 billion with $0.1 billion relating to fourth quarter sailings. Approximately 55 percent of bookings taken during the quarter ending August 31, 2020 were new bookings, as opposed to FCC re-bookings, despite minimal advertising or marketing
As of August 31, 2020, the company has a total of $8.2 billion of cash and cash equivalents.
Currently, the company is unable to predict when the entire fleet will return to normal operations, and as a result, unable to provide an earnings forecast. The pause in guest operations continues to have a material negative impact on all aspects of the company's business, including the company’s liquidity, financial position and results of operations. The company expects a net loss on both a U.S. GAAP and adjusted basis for the quarter and year ending November 30, 2020. The company's monthly average cash burn rate for the third quarter 2020 was $770 million, which was in line with the anticipated monthly cash burn rate. The company expects the monthly average cash burn rate for the fourth quarter of 2020 to be approximately $530 million. This results in an average monthly burn rate for the second half of the year of $650 million as previously disclosed. This rate includes approximately $250 million of ongoing ship operating and administrative expenses, working capital changes (excluding changes in customer deposits and reserves for credit card processors), interest expense and committed capital expenditures (net of committed export credit facilities) and also excludes scheduled debt maturities. The company continues to explore opportunities to further reduce its monthly cash burn rate.
In the face of the global impact of COVID-19, the company paused its guest cruise operations in mid-March. The company resumed limited guest operations on September 6, 2020, with Costa Cruises' ("Costa") successful voyage visiting five destinations in Italy. The company plans to continue the limited resumption of its guest cruise operations with additional Costa ships over September and October, as well as with AIDA Cruises' ("AIDA") during the fall 2020. These brands are beginning the company's anticipated gradual, phased-in resumption of guest cruise operations. The initial cruises will continue to take place with adjusted passenger capacity and enhanced health protocols developed with government and health authorities, and guidance from our roster of medical and scientific experts. Other brands and ships are expected to return to service over time to provide guests with unmatched joyful vacations in a manner consistent with the company's highest priorities, which are compliance, environmental protection and the health, safety and well-being of its guests, crew, shoreside employees and the people in the communities its ships visit. Many of the company's brands source the majority of their guests from the geographical region in which they operate. In the current environment, the company believes this will benefit it in resuming guest cruise operations.
Update on Bookings
While the company believes bookings in the first half of 2021 reflect expectations of the phased resumption of its guest cruise operations and anticipated itinerary changes, as of August 31, 2020, cumulative advanced bookings for the second half of 2021 capacity currently available for sale are at the higher end of the historical range and similar to where booking positions were in 2018 for the second half of 2019. The company believes this demonstrates the long-term potential demand for cruising. Pricing on these bookings are lower by mid-single digits versus the second half of 2019, on a comparable basis, reflecting the effect of future cruise credits ("FCC") from previously cancelled cruises being applied. The company continues to take bookings for both 2021 and 2022. The company is providing flexibility to guests with bookings on sailings cancelled by allowing guests to receive enhanced FCCs or elect to receive refunds in cash. Enhanced FCCs increase the value of the guest's original booking or provide incremental onboard credits. As of August 31, 2020, approximately 45 percent of guests affected by the company's schedule changes have received enhanced FCCs and approximately 55 percent have requested refunds. Total customer deposits balance at August 31, 2020, was $2.4 billion, the majority of which are FCCs, compared to total customer deposits balance of $2.9 billion at May 31, 2020. The decline in customer deposits is consistent with previous expectations. As of August 31, 2020, the current portion of customer deposits was $2.1 billion with $0.1 billion relating to fourth quarter sailings. Approximately 55 percent of bookings taken during the quarter ending August 31, 2020 were new bookings, as opposed to FCC re-bookings, despite minimal advertising or marketing
As of August 31, 2020, the company has a total of $8.2 billion of cash and cash equivalents.
Currently, the company is unable to predict when the entire fleet will return to normal operations, and as a result, unable to provide an earnings forecast. The pause in guest operations continues to have a material negative impact on all aspects of the company's business, including the company’s liquidity, financial position and results of operations. The company expects a net loss on both a U.S. GAAP and adjusted basis for the quarter and year ending November 30, 2020. The company's monthly average cash burn rate for the third quarter 2020 was $770 million, which was in line with the anticipated monthly cash burn rate. The company expects the monthly average cash burn rate for the fourth quarter of 2020 to be approximately $530 million. This results in an average monthly burn rate for the second half of the year of $650 million as previously disclosed. This rate includes approximately $250 million of ongoing ship operating and administrative expenses, working capital changes (excluding changes in customer deposits and reserves for credit card processors), interest expense and committed capital expenditures (net of committed export credit facilities) and also excludes scheduled debt maturities. The company continues to explore opportunities to further reduce its monthly cash burn rate.
Carnival Corporation (NYSE: CCL) stock price history
The image below, obtained from Google, shows the stock price history of Carnival Corporation (NYSE: CCL) over the last 5 years. And it's been a horrible time for Carnival Corporation (NYSE: CCL). 5 years ago the stock was trading at around $51 and its currently trading at $15.31 That's a loss of -69.7% suffered by Carnival Corporation stockholders over the last 5 years.
The stock of Carnival Corporation is trading at a lot closer to its 52 week low of $7.80 than it is to its 52 week high of $51.94 which to us is a clear indication that the short term sentiment and momentum of Carnival Corporation is overwhelmingly negative at this point in time.
The stock of Carnival Corporation is trading at a lot closer to its 52 week low of $7.80 than it is to its 52 week high of $51.94 which to us is a clear indication that the short term sentiment and momentum of Carnival Corporation is overwhelmingly negative at this point in time.
Carnival Corporation (CCL) stock price vs Royal Caribbean Cruises (RCL) stock price
The image below shows the stock price performance of Carnival Corporation (CCL) and Royal Caribbean Group (RCL) over the last 5 years. And its not been a good time for cruise ship companies. Especially since the start of 2020 when the Covid-19 pandemic started to hit international travel. The summary below shows the stock price returns of Carnival and Royal Caribbean over the last 5 years:
The stock of Royal Caribbean Group has therefore easily outperformed that of Carnival Corporation over the last 5 years.
- Royal Caribbean Group (RCL): -28.05%
- Carnival Corporation (CCL): -69.7%
The stock of Royal Caribbean Group has therefore easily outperformed that of Carnival Corporation over the last 5 years.
Recent coverage of Carnival Corporation
The extract below covers the latest regarding Carnival as obtained from Fool.com
Cruise lines were dealt a heavy blow during the initial stages of the COVID-19 crisis. Investors walked the plank the moment that Carnival (NYSE:CCL) (NYSE:CUK) and smaller rivals Royal Caribbean Cruises (NYSE:RCL) and Norwegian Cruise Line Holdings (NASDAQ:NCLH) shut down their passenger sailings in March. The ocean splashes weren't pretty.
Hungry for cash by early April, Carnival made some pretty desperate financing moves. It issued secure bonds yielding nearly 12% in this otherwise low interest rate environment. It also sold $500 million worth of stock at $8 a share. Those investors are feeling pretty good about now. The stock has more than doubled over the past five months, but are the gains warranted? Is Carnival really twice the company it was in early April? Let's take a closer look at the challenges and opportunities awaiting Carnival stock and its investors in the coming months.
Pieces of eightToday's Carnival isn't theoretically any closer to sailing than the cruise line we knew back in early April. Carnival cancellations only stretched through May 10 at that time. We're now looking at a November restart at the earliest, and the market knows the drill by now. Every couple of days Carnival is putting out a press release delaying more of its sailings.
Carnival itself is also going to be smaller now than we thought back in April when it does get to business. It has disposed of or has plans to dispose of 18 of its more inefficient ships, accounting for 12% of its revenue this year.
Today's Carnival isn't all worse, but the rare areas of improvement have come at a price. In April we didn't know that Carnival, Royal Caribbean, and Norwegian Cruise Line would be spending the next several months with crew members stuck on their ships -- in a few cases perishing and initially without pay -- as they negotiated the repatriation process. The industry's crews are now back home, but one can imagine that turnover will be a bear when the time comes for them to come back to work.
Read the full article here
Cruise lines were dealt a heavy blow during the initial stages of the COVID-19 crisis. Investors walked the plank the moment that Carnival (NYSE:CCL) (NYSE:CUK) and smaller rivals Royal Caribbean Cruises (NYSE:RCL) and Norwegian Cruise Line Holdings (NASDAQ:NCLH) shut down their passenger sailings in March. The ocean splashes weren't pretty.
Hungry for cash by early April, Carnival made some pretty desperate financing moves. It issued secure bonds yielding nearly 12% in this otherwise low interest rate environment. It also sold $500 million worth of stock at $8 a share. Those investors are feeling pretty good about now. The stock has more than doubled over the past five months, but are the gains warranted? Is Carnival really twice the company it was in early April? Let's take a closer look at the challenges and opportunities awaiting Carnival stock and its investors in the coming months.
Pieces of eightToday's Carnival isn't theoretically any closer to sailing than the cruise line we knew back in early April. Carnival cancellations only stretched through May 10 at that time. We're now looking at a November restart at the earliest, and the market knows the drill by now. Every couple of days Carnival is putting out a press release delaying more of its sailings.
Carnival itself is also going to be smaller now than we thought back in April when it does get to business. It has disposed of or has plans to dispose of 18 of its more inefficient ships, accounting for 12% of its revenue this year.
Today's Carnival isn't all worse, but the rare areas of improvement have come at a price. In April we didn't know that Carnival, Royal Caribbean, and Norwegian Cruise Line would be spending the next several months with crew members stuck on their ships -- in a few cases perishing and initially without pay -- as they negotiated the repatriation process. The industry's crews are now back home, but one can imagine that turnover will be a bear when the time comes for them to come back to work.
Read the full article here
Carnival Corporation (NYSE:CCL) latest stock valuation
So based on the 3rd quarter 2020 earnings report and the gloomy operating environment that Carnival Corporation (NYSE: CCL) finds itself in, what do we value Carnival Corporation (CL) stock at? Based on Carnival's earnings report in which they reported a significant loss we have decided to value the group at their latest available stockholders equity per share. We therefore have a target price of $31.70. We therefore believe Carnival Corporation is undervalued
We usually recommend that long term fundamental and value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $31.70. So a good buying price for the stock will be below $28.50 and the stock is currently well below this price. We therefore rate Carnival Corporation a buy. Even with all its difficulties, these tough times for them shall pass and they will recover.
We usually recommend that long term fundamental and value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $31.70. So a good buying price for the stock will be below $28.50 and the stock is currently well below this price. We therefore rate Carnival Corporation a buy. Even with all its difficulties, these tough times for them shall pass and they will recover.