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Smooth Sailing for Carnival

We plan to raise our fair value estimate on the narrow-moat company.

Securities In This Article
Carnival Corp
(CCL)

Spending on the experience economy continues to benefit narrow-moat

We plan to raise our $60 fair value estimate by about $3 to account for the first-quarter outperformance and see some gains in higher-than-expected pricing ahead as partially offset by higher-than-forecast costs in our prior model. On top of this, we plan to add about another $2 for faster capacity growth, which is expected to rise at a 4.5% compound annual growth rate through 2021, faster than the 2%-3% we had included in our valuation over the next five years. This would indicate shares as undervalued, trading at 16.6 times the midpoint of updated guidance, and at about a 10% discount to our updated fair value estimate.

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About the Author

Jaime M. Katz, CFA

Senior Equity Analyst
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Jaime M. Katz, CFA, is a senior equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers home improvement retailers and travel and leisure.

Before joining Morningstar in 2011, Katz was an associate for Credit Agricole Corporate and Investment Bank. She also worked in equity research for William Blair for three years and spent three years in asset management at Mesirow Financial.

Katz holds a bachelor’s degree in economics from the University of Wisconsin and a master’s degree in business administration from the University of Chicago Booth School of Business. She also holds the Chartered Financial Analyst® designation. She ranked first in the leisure goods and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

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