CUK Fundamental Research Investment Analysis, Carnival PLC ADS

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Carnival PLC ADS (CUK)

The Razor's Edge

2-Year Price History

Recent Price
(2/2/2009)
$17.72
52-Week Price
$15.24 - $43.00
Market Capitalization
$3.8 Billion
Dividend Yield
9.00%
Most Recent Dividend
$1.25

About Carnival PLC ADS

Carnival PLC ADS is considered to operate in the Services sector. They specifically operate in the General Entertainment business segment contained within the Leisure industry.

The Company operates as a cruise company and one of the main vacation companies in the world.

Ockham's Rating

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CUK Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at CUK through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 7 years are 4.50x and 3.08x respectively.

Utilizing this range we can see that CUK’s current Price to Sales per share ratio of 0.18x is significantly below its average levels historically. In fact, with a current price of $18.05, CUK is a full 96% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for CUK.

CUK Cash Earnings

Looking at CUK specifically in their Cash Earnings capabilities, Ockham views CUK as significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 7 years of cash earnings levels for CUK to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 17.21 and a 11.44 low over the same period.

Now that CUK’s current price is $18.05 and its Price to Cash Earnings ratio is 3.15, we are very positive on its outlook from the cash earnings perspective. In fact, CUK is now trading a full 79% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why CUK has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.

CUK Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure on a company's inherent expectations.

Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from CUK against the historic high and low levels over an available data range. Because CUK has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In CUK’s case, the estimated annual dividend is $1.60 producing a current dividend yield of 8.86%. The highest dividend yield from CUK in recent history was 10.50% while the lowest dividend yield was 0.59%. If you are looking for some “bang for your buck” then a dividend yield of 59.78% above the historical median should be enticing. CUK receives a positive boost in our view because as you know, equity at its core is simply a claim on future dividends.

Peer Comparison

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Carnival PLC ADS Industry Grouping

(2/2/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding CUK) 7.39 5.89 » 65.18 0.28 0.29 » 572.44 189.18% 43.18%
*10 year range does not include current year values
Tim Hortons Inc. THI $4.4 Billion $24.43 12.10 9.87 » 22.15 0.00 0.00 » 0.00 n/a 139.45%
Carnival PLC ADS CUK $3.8 Billion $17.72 3.15 2.73 » 86.59 0.18 0.17 » 23.71 n/a 11.68%
Darden Restaurants, Inc. DRI $3.6 Billion $26.18 5.12 4.67 » 16.34 0.49 0.41 » 1.18 7.32% 22.82%
Wynn Resorts Limited WYNN $3.1 Billion $29.73 5.16 4.72 » 246.61 0.89 1.02 » 2861.00 371.04% 10.25%
Burger King Holdings, Inc. BKC $2.9 Billion $21.77 10.25 7.06 » 22.09 0.00 0.00 » 0.00 n/a 11.82%
Starwood Hotels & Resorts Worldwide, Inc. HOT $2.7 Billion $14.87 4.33 3.14 » 18.70 0.00 0.00 » 0.00 n/a 31.55%
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Key Fundamentals

CUK - Carnival PLC ADS Fundamentals
Price (2/2/2009) $17.72
Volume (2/2/2009) 190,600
10 Day Average Volume 301,800
13 Week Price Range $15.24 - $24.72
52 Week Price Range $15.24 - $43.00
LTM Revenue $3.0 Billion
 
Shares Outstanding (11/2007) 213.2 Million
Market Capitalization $3.8 Billion
Shares Held By Institutions 6.2 Million
Institutional Holders 59
% Shares Held By Institutions 2.90%
Earnings Per Share (EPS) $0.62
P/E Ratio 29.50
Book Value Per Share $20.01
 
Gross Margin 61.30%
Quarterly Dividend 1.60
Dividend Yield 9.00%
Beta 1.50
Fiscal Year Ends November