What is the financial state of Princess and CCL

[sammiedawg]

I'm sure Wall Street will evaluate which company pulls off the expansion into Asia successfully.

As a consumer, cruise prices remain a bargain but this advantage is greatly offset by sky high airline prices. Ocean cruise lines also face big competition from the exploding river cruise industry.

[bluesea321]

I don't know the financial state, but three years ago I bought 100 shares for about $3200. The shares are worth $4,058 now. I also have received $300 in quarterly dividends. I have also received about $1200 in OBC. I'm ok with that.

 

The OBCs are a great benefit of owning CCL shares and their worth may supersede the stock's actual performance for those that just buy 100 shares and cruise a lot. In your case the extra $1,200 in OBCs make the stock worthwhile. However from a larger investment perspective, even the great returns you mentioned above are below market. If your shares were worth $4,058 on 5/26/14 and you got $300 of dividends then your total of $4,358 with a $3,200 investment yielded a return of 36%. Over the same 3 year period the SP500 yielded 43% so CCL underperformed. That was a good period for CCL. As I mentioned in my earlier post. CCL yielded 19% over a 10 year period (including adjustments for dividends) vs. 70% for the SP500.

[sept10dsm]

Yahoo Finance analyst ratings-

2 Strong Buy

7 Buy

10 Hold

1 Underperform

1 Sell

 

And it's really worth it if you cruise a lot and use the OBC given. Some may recoup the cost of the stock just with those OBCs!

[PescadoAmarillo]

And it's really worth it if you cruise a lot and use the OBC given. Some may recoup the cost of the stock just with those OBCs!

We don't actually consider it among our investments; it's really purchasing a discount program.

[PescadoAmarillo]

I think the biggest issue is that all of the main stream cruise lines have built so many ships the past 10 years, that there is so much saturation in the cruise industry. Thus the prices for the cruise itself have gone down so much which then requires the onboard sales to help make up the prices. This is why we are seeing additional charges everywhere.

 

If they could instantly rid themselves of the older ships at a reasonable price, they would come out ahead, as the newer ships are much less expensive to operate on a per person basis. But retaining the older ships, and therefore increasing capacity, causes price pressure on the older ships too, so that they become even less financially viable.

[bluesea321]

As a consumer, cruise prices remain a bargain but this advantage is greatly offset by sky high airline prices.

 

Good point. My last cruise in March on the Royal cost $2,194 for a 7 day Caribbean, 2 people, deluxe balcony, insurance included (but not on-board extras). The air Houston to FLL for 2 cost $1,227 (including unfortunately a $400 change fee). The ratio of air price to cruise has definitively gone up, this for far lousier service. I am lucky that my bags were free, otherwise I would have paid $100 extra.

[moonhunter]

We bought stock about three years ago and since we take long cruises we have probably gotten back over half of the money we paid in OBC's, plus the stock pays dividends and has gone up in value. One of our best investments.

[swedish weave]

As I mentioned on another post, Princess is owned by CCL and CCL stock has underperformed the market by a wide margin over both a 5 and 10 year period - it has been a bad investment. In the first quarter of 2014 CCL had no profits, actually a loss of 2 cents per share. Revenues for the 1st Q were in line with the previous year so the loss is attributed to increased expenses. If we look at a 10 year period, CCL stock increased from $33.22 on 5/28/04 to today's price (10 am CDT) of $39.31 or 18% over 10 years. This compares with a 70% increase for the SP500 over the same 10 years. Stockholders cannot be happy over this. From the outside it is difficult or impossible to discern the profitability of each of the CCL cruise lines individually but no doubt Princess is looking at ways to increase revenues.

 

The following are two links regarding costs/performance. The first one relates to a $400 million expense to add scrubbers. The second one has to do with the Asian market.

 

http://www.latimes.com/business/la-fi-carnival-400-million-cruise-ship-pollution-20140522-story.html

 

http://www.businessweek.com/articles/2014-05-22/in-china-cruise-lines-hope-to-woo-millions-of-first-time-guests?campaign_id=yhoo

 

The data you post is undoubtedly correct, but to select a specific time period to support your ideas is not a true picture of the condition of the company. I could select a more recent time period to show a completely different picture.

 

The true value of a company is determined by the stock market. Debt equity ratio is a big factor in my decision to buy or not.

 

The value to an individual investor is determined by why the person purchased the stock and what benefits are derived from ownership.

 

Most who post here are very happy with the value and returns on Carnival stock.

[AE_Collector]

In August 2011 I bought Carnival and Royal Caribbean shares.

 

CCL bought $30.50. Current price $39.51. Up 29%

 

RCL bought $24.50. Current price $54.23. Up 121%

 

One owns my favorite cruise line and the other is my favorite stock (of the two).

 

Terry

[bluesea321]

The data you post is undoubtedly correct, but to select a specific time period to support your ideas is not a true picture of the condition of the company. I could select a more recent time period to show a completely different picture. The true value of a company is determined by the stock market. Debt equity ratio is a big factor in my decision to buy or not. The value to an individual investor is determined by why the person purchased the stock and what benefits are derived from ownership. Most who post here are very happy with the value and returns on Carnival stock.

 

Purchasing 100 shares of CCL to get the OBCs may well be worth it to someone who cruises a lot and I suspect that many who post here have done so for that reason. However there are 770 million CCL shares outstanding and I doubt that the 100 share lots make much of an impact to either the company or the share price.

 

From an investment perspective, OBCs aside, the only thing that counts is RoI, the Return on Investment. People often use other metrics to predict future performance but I have yet to find anyone with a reliable crystal ball. I don't know what CCL will do in the future nor does anyone else but I sure know what it has done since it went public in 1987. You can look at any benchmark you like, 5 yr, 10yr, 15yr, etc. The facts show that CCL did very well from 1990 to 2000 (nearly everything did well then) but it has done poorly since. If we had a crystal ball we could have made money in the interim but playing games with the data does not obscure the facts, we can do that with any stock, even Enron which went bust.

 

Again I am not referring to the 100 share lots purchased for OBCs which may well be worth it just for that reason. As Pescado Amarillo posted, she purchased a discount program, not an investment. For the other investors the 19% net return of CCL (including dividends) over the last 10 years hardly compares with the 70% of the SP500.

 

The link below shows the facts since CCL went public. The chart speaks for itself.

http://finance.yahoo.com/echarts?s=CCL+Interactive#symbol=CCL;range=my

[caribill]

Again I am not referring to the 100 share lots purchased for OBCs which may well be worth it just for that reason. As Pescado Amarillo posted, she purchased a discount program, not an investment. For the other investors the 19% net return of CCL (including dividends) over the last 10 years hardly compares with the 70% of the SP500.

 

 

Yet I am certainly not unhappy with the 100% increase in CCL stock price since purchasing some in November, 2008. Timing is everything.

[paul929207]

I did not buy Carnival Corp for its investment potential. We cruise often. So I bought it for the OBC. We have had it for about 5 years and gotten over $4000 in OBC, $400 in dividends and the value of our stock is up $1400. If they were to go bankrupt today, it would still have been a great investment

[JPEvans]

The more mega ships that are built, the more cabins that will have to be filled. The many bad reviews on some of those ships has certainly been 1 factor among many others for the poor showings.

 

Not so sure about that. I sailed the Allure last year for the first time. And

It was, as far as the ship goes. Knew of the most enjoyable cruises I've

Ever been on. I was just impressed with the whole thing. From the

Quickest checkin I've ever experienced to how RCCL handled 6,000

Passengers to make the cruise an enjoyable cruise.

 

I also sailed the Royal Princess in December also. In spite of all the bad

Reviews. That ship is one of my favorites now. Not sure why people are

So down on that ship. From my cruise on that ship, Princess build a

Wonderful cruise ship. I can't wait to sail on the Royal Princess again.

[Loonbeam]

As multiple people have tried to explain, there is a difference between performance and stock value.

 

CCLs performance has been ...ok.. over the past couple of years, in that they have made a profit more quarters than not (http://ycharts.com/companies/CCL/profit_margin) - note that chart is oversimplified and doesn't adjust for one time and cyclical charges plus some other things.

 

Stock prices at the investor level are driven by how profit has performed Versus Expectations and how much future profits are Expected to be. So a company that is making money is sometimes not making enough money to satisfy investors. This is why a lot of companies make short term based decisions that hurt them in the long run. (Soapbox for a second - there is a big difference between making a profit and making as much profit as possible regardless of how you do it)

 

CCL is doing OK as an investor stock but not well compared to market, which is why its a hold. From that standpoint, a lot of focus is on the move to the growing Asian market and how that does and the performance of the two newest ships.

 

There are four reasons individuals typically directly own stock. One if because of employee purchase or compensation plans or other equity investments in an employer. Second is brand affiliation/benefits (which is why Disney is a widely held stock and why most people on here hold 100 shares of CCL). Third is an actual investment (unless you have a lot of time to do research, most individuals work with funds and etfs). Fourth is inheritance. None of these move the institutional needle much and only in the case of #3 is the stock really a key investment.

 

On a typical DAY, CCL moves 2.5 to 3 million shares. If every regular poster on here sold their shares right now, that might be 100,000 max and probably a lot less.

[swedish weave]

Purchasing 100 shares of CCL to get the OBCs may well be worth it to someone who cruises a lot and I suspect that many who post here have done so for that reason. However there are 770 million CCL shares outstanding and I doubt that the 100 share lots make much of an impact to either the company or the share price.

 

From an investment perspective, OBCs aside, the only thing that counts is RoI, the Return on Investment. People often use other metrics to predict future performance but I have yet to find anyone with a reliable crystal ball. I don't know what CCL will do in the future nor does anyone else but I sure know what it has done since it went public in 1987. You can look at any benchmark you like, 5 yr, 10yr, 15yr, etc. The facts show that CCL did very well from 1990 to 2000 (nearly everything did well then) but it has done poorly since. If we had a crystal ball we could have made money in the interim but playing games with the data does not obscure the facts, we can do that with any stock, even Enron which went bust.

 

Again I am not referring to the 100 share lots purchased for OBCs which may well be worth it just for that reason. As Pescado Amarillo posted, she purchased a discount program, not an investment. For the other investors the 19% net return of CCL (including dividends) over the last 10 years hardly compares with the 70% of the SP500.

 

The link below shows the facts since CCL went public. The chart speaks for itself.

http://finance.yahoo.com/echarts?s=CCL+Interactive#symbol=CCL;range=my

 

I disagree with your idea of setting the OBC aside. That is a major part of my ROI.

 

It isn't informative to others on this board if you skew the statistics to bolster your ideas.

[bluesea321]

Yet I am certainly not unhappy with the 100% increase in CCL stock price since purchasing some in November, 2008. Timing is everything.

 

I agree... timing is everything. There is a school of thought that says "buy and hold" and there is a school about "timing". Those that swear by the "buy and hold model", Jack Boggle of Vanguard for instance, state that no one can consistently time the market and that timers end up loosing to the buy and holds in the long term. On the other side there are certainly plenty on Wall Street that have gotten rich out of timing (not sure all legit). These days I do mostly B and H with some selected timing. Late 08 early 09 was a great time to invest - the crash of early/mid 08 appeared to bottom out and while risky I bought a chunk of Chevron stock in Jun 09 at an effective cost of $56 (adjusted for dividends). Today it is trading at $122, a 118% increase so yes, timing is everything... I also hold a separate amount of Chevron acquired over a lifetime of B and H at an effective basis of $16 a share, that is nearly a 700% increase. As good as Chevron has been, if I had bought Apple 30 years ago instead (at $3.20 adjusted price) it would have yielded an incredible 19,500%. I didn't... :eek:

[AE_Collector]

I disagree with your idea of setting the OBC aside. That is a major part of my ROI.

 

It isn't informative to others on this board if you skew the statistics to bolster your ideas.

 

There is nothing wrong with presenting the facts on an investment. Bluesea123 didn't say that there is no additional value created (for cruisers) in owning CCL. Everyone on here knows that there is more to the equation because if available OBC but the true value of that can only be determined by each individual cruiser. Some might do one 7 day cruise every 5 years on Princess while others are onboard for one month, off for a month and then back on for a month thus really getting extra value from CCL ownership.

 

Thanks bluesea321 for the balanced review strictly from a financial investment point of view.

 

Terry

Edited May 29, 2014 by AE_Collector

[bluesea321]

Purchasing 100 shares of CCL to get the OBCs may well be worth it to someone who cruises a lot and I suspect that many who post here have done so for that reason. However there are 770 million CCL shares outstanding and I doubt that the 100 share lots make much of an impact to either the company or the share price.

 

From an investment perspective, OBCs aside, the only thing that counts is RoI, the Return on Investment. People often use other metrics to predict future performance but I have yet to find anyone with a reliable crystal ball. I don't know what CCL will do in the future nor does anyone else but I sure know what it has done since it went public in 1987. You can look at any benchmark you like, 5 yr, 10yr, 15yr, etc. The facts show that CCL did very well from 1990 to 2000 (nearly everything did well then) but it has done poorly since. If we had a crystal ball we could have made money in the interim but playing games with the data does not obscure the facts, we can do that with any stock, even Enron which went bust.

 

Again I am not referring to the 100 share lots purchased for OBCs which may well be worth it just for that reason. As Pescado Amarillo posted, she purchased a discount program, not an investment. For the other investors the 19% net return of CCL (including dividends) over the last 10 years hardly compares with the 70% of the SP500.

 

The link below shows the facts since CCL went public. The chart speaks for itself.

http://finance.yahoo.com/echarts?s=CCL+Interactive#symbol=CCL;range=my

 

I disagree with your idea of setting the OBC aside. That is a major part of my ROI.

 

It isn't informative to others on this board if you skew the statistics to bolster your ideas.

 

swedish weave, please re-read my post above, you missed the point. Buying 100 shares to get the OBCs is a good plan and if that is what you did then it is part of your RoI indeed. My original post was clear on this. However for those that buy CCL as a pure investment, not for the OBCs, the facts speak for themselves. You state that I am skewing the statistics to bolster my ideas - no such thing... I think readers on this board can look at the chart I referenced, which are the facts, not my skewed ideas, and draw the proper conclusions. Please have a good day. :)

[bhopal21]

To oversimplify, I look at it this way:

 

100 shares CCL = great investment for cruisers

 

10,000 shares CCL = not a good investment for anyone whether they cruise or not.

 

JMHO of course.

 

Mike:)

[bluesea321]

There is nothing wrong with presenting the facts on an investment. Bluesea123 didn't say that there is no additional value created (for cruisers) in owning CCL. Everyone on here knows that there is more to the equation because if available OBC but the true value of that can only be determined by each individual cruiser. Some might do one 7 day cruise every 5 years on Princess while others are onboard for one month, off for a month and then back on for a month thus really getting extra value from CCL ownership.

 

Thanks bluesea321 for the balanced review strictly from a financial investment point of view.

 

Terry

 

Thanks Terry... I appreciate your comments. :)

 

For frequent cruisers owning 100 shares of CCL will impact their return substantially and if they cruise enough it may be the sole reason needed for owning the 100 shares. As Pescado Amarillo said (a person who cruises 10-15 times in a row every winter) it was a discount program for her, not really a stock investment. That being the case, 27% of CCL is owned by institutional investors and 14% is owned by Mickey Arison (he is selling 10 million shares out of the 110 million he owns so his % may be decreasing). Arison and the Institutions don't care about OBCs and while I have no data, I doubt the majority of the other investors are Princess loyalists who own the stock for the OBCs. If a person owns 10,000 shares instead of 100 the OBCs are inconsequential even if the person is a cruiser.

[bluesea321]

To oversimplify, I look at it this way:

 

100 shares CCL = great investment for cruisers

 

10,000 shares CCL = not a good investment for anyone whether they cruise or not.

 

JMHO of course.

 

Mike:)

 

Hi Mike... I think you said it very well with one big caveat from my end. My crystal ball is no better than anyone else's so who knows... CCL could take off like a rocket and yield great results in the coming years. I have no idea what the future will bring for the 10,000 share type of investors. All I tried to say is that since the year 2000 CCL has been struggling, stock wise. As I mentioned, it is/was possible to make money by judicious timing but that is the case for all stocks if one has a "ball". The lack of profits in the 1st Q 2014 (actually a 2 cent per share loss), the added capacity and discounting, the Concordia and Triumph incidents, and Arison dumping 10% of his holdings are not encouraging signs but again who knows... :confused:

[caribill]

27% of CCL is owned by institutional investors and 14% is owned by Mickey Arison (he is selling 10 million shares out of the 110 million he owns so his % may be decreasing).

 

I believe Arison, his family, and family trusts hold close to 50% of the stock.

[bhopal21]

In complete agreement on past performance.

 

No one knows what the future holds for sure, but it ain't looking so hot.:rolleyes:

 

Mike:)

[bluesea321]

I believe Arison, his family, and family trusts hold close to 50% of the stock.

 

Hi caribill, I got my info from 3 sources, Forbes, Yahoo Finance and Reuters and 24% for total family holdings is the best I can come up with.

 

Forbes (their issue about the "400 Richest People in America") states Arison's net worth at $5.9 billion and as the single biggest shareholder. On the web Forbes states http://www.forbes.com/profile/micky-arison/ that "he is selling 10 million shares which is about 9% of his stake" so if 10 million is 9% then he owns 111 million shares. With 777 million outstanding (per Yahoo Finance, http://finance.yahoo.com/q/ks?s=CCL+Key+Statistics) Arison owns the 14% I quoted for him.

 

Yahoo finance also lists the major stockholders. Arison is listed as 0% direct ownership but the following trusts (not institutionals) are listed:

MA 1994 B SHARES LP 97,938,886

ETERNITY FOUR TRUST 58,758,183

MBA I, L.P. 900,000

ARISON MICKY MEIR 0

ETERNITY TWO TRUST 401,307

Arison and family obviously own the MA 1994 LP, don't know about the Eternitys or MBA but with those holdings included the ownership would be 20% of the outstanding shares.

 

Reuters states the following as of 2/28/2014:

"If all the Shares covered by the sales plans are sold, the Arison family and related entities will remain beneficial owners of approximately 188 million Shares, constituting approximately 24% of the total combined voting rights of Carnival Corporation & plc." http://in.reuters.com/article/2014/02/28/carnival-corp-arison-idUSnPnCLwvBmx+164+PRN20140228

 

The Arison family has been selling shares for a long time. I think the Reuters article lists the most current holdings after the sales so 24% appears to be the best estimate I have for total family holdings. Do you have better data?

 

Also for whatever it is worth, with Institutionals and Mutual Funds (Northern Trust, Capital World, Suntrust, etc) holding 27% and the Arison family at 24% that leaves 49% at most in the hands of individual investors.

[AE_Collector]

In complete agreement on past performance.

 

No one knows what the future holds for sure, but it ain't looking so hot.:rolleyes:

 

Mike:)

 

Having watched the direction that Celebrity has gone in I can't help agreeing that it may not look good for either shareholders or Carnival Corp brand cruisers or maybe both.

 

I think that Celebrity is ultimately squeezing more revenue from each passenger than what Princess is. The most notable to me is that Celebrity pretty much doesn't allow combining of OBC. There are exceptions but nothing like the combinability of OBC on Princess.

 

I think that Celebrity's recent changes to their future cruise program is very clever of them though it doesn't work well for me. That is, there is now a much higher presence of the future cruise sales area with more than one person staffing it AND higher rewards for actually booking your next trip as opposed to just placing a deposit. Getting people booked on a cruise right then is going to increase the odds of that person being on a Celebrity ship for their next cruise.

 

Celebrity added two more higher levels of loyalty recently which I would expect that Princess will ultimately likely do as well. These highest levels only benefit a small number of cruisers yet they give all Princess cruisers something to work towards or at least dream of.

 

Incidently, we were on a Celebity cruise last fall when overnight they launched their revamped loyalty program. Showing how easy it is to totally annoy passengers with poorly implemented changes (AKA Regal Room Service charges), Celebrity was also reducing substantially the "earn rate" for most Celebrity cruises which determines how quickly you get to the next level. Our 27 day B2B would have finally put us very close to Elite status once complete or at least we expected it would when we boarded. When we disembarked we had barely earned half the credit that we expected to because of the change made while we were at sea. No amount of "whining" to their Captains Club on my part or any other passengers part convinced Celebrity that we had been "wronged" by the change made mid cruise and consequently we have come back to Princess doing 5 seperate Princess cruises totalling over 60 days since those last Celebrity cruises. Such a relatively small change can backfire causing great harm to customer loyalty rather than enhancing customer loyalty when poorly implemented.

 

I compare Princess to Celebrity only because those are the only two brands that I have cruised on AND they are from each of the two big publicly listed operators.

 

Terry

Edited May 29, 2014 by AE_Collector