Entering text into the input field will update the search result below

Carnival: Sailing Into The Unknown

Baronport Capital profile picture
Baronport Capital


  • Shares of the British-American cruise giant have once again experienced strong selling pressure after yet another troublesome earnings release.
  • Investors in the company now have a chance to acquire shares of Carnival for below pandemic prices at a 30-year low of $7.03 per share.
  • Operational results for the quarter represented a great improvement over the last quarter but failed to properly pour over to the financial results.
  • The current cash-generating potential of Carnival still fails to even cover the interest expenses on the $35 billion in debt the company incurred.
  • CCL appears to be heading into rough seas as the situation for the common stockholder continues to slowly deteriorate.

Titanic and Iceberg

MR1805/iStock via Getty Images

I have long held a bearish stance on the British-American entertainment cruise giant, Carnival Corporation (NYSE:NYSE:NYSE:CCL)(NYSE:NYSE:NYSE:CUK), and have first outlined my thoughts on the matter in an article written in December last year titled: "Simply

This article was written by

Baronport Capital profile picture
Baronport Capital offers independent equity research through a bottom-up fundamental approach from a long-term oriented value investor. He is passionate about investing and finance. He embraced the concepts and principles of value investing, an investment philosophy shaped by the written works and lives of Charlie Munger, Howard Marks, Seth Klarman, and other figures. Occasionally contributes to Quiver Quantitative.

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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (9)

Mike Schimek profile picture
bengalesq profile picture
The only trade here is on gamble or playing on swings in sentiment - not based on numbers. The numbers say stay away - and so I shall. If I am going to take a flier I would rather it be on AVXL where the potential payoff is so much higher and on a definitive timeline.
How are they still in business?.Floating Petri dishes.. thats all they ever were..what a waste of fuel..
Very thorough and well-reasoned article. I am not quite as negative on FCF as the author, because working capital should recover as the capacity and occupancy is fully restored.

My back of the napkin calculations for the next 5 quarters are as follows:

EBITDA - $4.1 B ($0 in Q4 '22)
Interest - ($2.0) B
Capex - ($5.6) B
Working capital - $1.0 B
Net Debt change - ($2.5) B

EBITDA gets back to 2019 levels in Summer of 2023 (Q3), and begins to equal or exceed 2019 EBITDA from there.

Risks to these projections:

Deep recession
Bad press, discouraging potential customers
Fuel (probably no credit available to hedge now)

I am neutral on the share price at this time, but do not believe bankruptcy is a concern. Cash burn is largely neutralized, as a large chunk (majority) of the capex is growth oriented, and will not continue if the business does not exceed or surpass 2019 cash flow from operations.
Who Moved My Cheese profile picture
Great take on the company. In the $6's this morning. Either a great long term investment opportunity or a total loss.
@Who Moved My Cheese If company goes bankrupt I lose money, if not then I make 3x in the short term (1 year). I just took the offer.
Who Moved My Cheese profile picture
@Claudio963 Could be 4x. But too great of a risk for me. Good luck.
BeatingTheJoneses profile picture
I think you input the incorrect figures.

“As per the latest quarterly filing, the company had $35.28 billion in total debt and $28.21 billion in net debt. In the third quarter of 2019, prior to the pandemic, the company reported $35.28 billion in total debt and $28.21 billion in net debt”
they will have to reorganize at some point, end of story.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

About CCL

SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on CCL

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.