Cruise Lines Continue to Maintain Moats
Carnival, Royal Caribbean, and Norwegian are undervalued and worth a look.
Jaime Katz: We recently reassessed the economic moat sources of the cruise industry within Morningstar’s moat frameworks and found our narrow moat ratings still hold for Carnival, Royal Caribbean, and Norwegian.
First, we assessed the efficient scale moat source, which we believe represents the strongest moat source for the cruise companies. Out of the eight factors that could support an efficient scale moat, the cruise companies display five factors, including high sunk costs, significant entry barriers, historical precedent, excess capacity, and mature demand.
Jaime M. Katz does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.