Carnival Corporation (CCL)

Conclusion

Carnival Corporation is a cruise operator that runs brands including Carnival Cruise Line, Princess Cruises, Holland America Line and Cunard across four segments. At 30.81 USD on 2026-11-09, the shares give a market capitalisation of 41.4 billion USD and an enterprise value of 65.4 billion USD.

The verdict is fair. The P/E of 13.2x sits below its ten-year median of 14.8x, a premium of -10.6%, and EV/EBITDA of 9.0x compares with a median of 10.2x. The DCF gives 27.07 USD per share at a discount rate of 17.2%, while the fair value from historical multiples is 37.34 USD. The fair value band runs from 25.76 to 38.65 USD with a midpoint of 32.21 USD, a margin of safety of 4.5% at the current price. The reverse DCF implies growth of 13.5% a year, against revenue compound growth of 29.8% over three years, 36.6% over five and 5.4% over ten.

What holds the case up: free cash flow conversion of 101.2% on a trailing basis, eight earnings beats in eight quarters, and an operating margin of 16.0% against a ten-year median of 15.0%. What would break it: a current ratio of 0.27, an Altman Z-score of 1.47 in the distress zone, and a share count that has grown 12.6% a year over five years.

Financial health

The colour is red, because the current ratio of 0.27 and the Altman Z-score of 1.47 are assessed as bad, while net debt to EBITDA of 3.3x and interest coverage of 3.7x are neutral. The quick ratio is 0.15 and debt to equity is 1.77. The Altman model was designed for manufacturers, so for a cruise company its zone of distress is only a rough guide. Insolvency risk: low, about 1.8% by the estimate of the Ohlson model over one to two years, based on figures to 2025-11-30. Liquidity is the weakest part of the balance sheet, and leverage leaves little room if earnings fall.

Earnings quality

The colour is yellow. Free cash flow conversion is 101.2% on a trailing basis, but the five-year figure is not available. The accrual ratio is -6.9%, which points to cash earnings running ahead of reported earnings. Stock-based compensation is 0.4% of revenue, and free cash flow after it is 3.08 billion USD. The share count has grown at 12.6% a year over five years, which is assessed as bad and means dilution rather than buybacks. The Piotroski score is 7 of 9, and the Beneish M-score is not available. The company beat estimates in all eight recent quarters, with an average surprise of 96.7%. Current-year estimates rose 0.9% over 90 days, but next-year estimates fell 2.4%, with 17 downward revisions against 8 upward in the last 30 days.

Profitability

The colour is green. Margins are at or above their ten-year medians: gross margin 34.2% against 35.6%, operating margin 16.0% against 15.0%, and net margin 11.4% against 9.0%. ROIC of 11.4% sits against a WACC of 12.5%, a ROIC minus WACC of -1.1%, assessed as neutral, and the five-year median ROIC is 5.5%. Return on equity is 22.1% on a trailing basis, but the DuPont split (net margin 10.4%, asset turnover 0.52, equity multiplier 4.21, annual to 2025-11-30) shows that leverage contributes much of that return.

Growth

The colour is green. Revenue compound growth is 29.8% over three years, 36.6% over five and 5.4% over ten. Revenue grew in 8 of the 10 comparable years. Per-share growth lags sales growth: EPS compound growth over ten years is -1.4%, and free cash flow per share is -4.3%, because the share count has risen.

Valuation

The colour is yellow, matching a fair verdict. Against ten-year medians, the P/E is 13.2x versus 14.8x (premium -10.6%), EV/EBITDA 9.0x versus 10.2x (-11.8%), P/FCF 13.0x versus 21.9x (-40.5%) and P/S 1.50x versus 1.83x (-18.1%). The P/B of 2.92x is above its median of 1.84x (+58.7%). The DCF gives 27.07 USD per share at a discount rate of 17.2%, with first-stage growth of 13.7% and terminal growth of 2.5%; the terminal value makes up 32.2% of the result. The fair value from historical multiples is 37.34 USD. The reverse DCF implies 13.5% growth. The fair value band is an order-of-magnitude estimate built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target. The dividend forward yield is 2.0%, and the payout on free cash flow is not available.

Risks

A current ratio of 0.27 leaves little liquid cushion, so any strain on cash would test the company quickly. Net debt of 3.3x EBITDA and interest coverage of 3.7x mean that a fall in earnings would weigh heavily on debt service. A five-year share count increase of 12.6% dilutes per-share returns, and falling next-year estimate revisions suggest that earnings expectations are cooling. The beta of 2.46 shows high sensitivity to the wider market. Not available: the Beneish M-score, five-year free cash flow conversion and the payout on free cash flow. This analysis has no debt maturity schedule and no revenue by segment, so it cannot judge refinancing timing or which parts of the business drive revenue.