When will Carnival shares be worth buying ?

[wowzz]

3 hours ago, molecrochip said:

@Selbourne I know that my example is a vast over simplification however when considering the liquidity of a business, its assets less liabilities as you know. My point was that whilst there is media focus on the liabilities, there are vast assets which need to be factored into the equation when considering the full picture.

 

An individual won't be declared bankrupt just for having an outstanding mortgage as long as the value of their assets is sufficient. With a lot of the older ships now gone, the assets represent good valuable young assets.

 

Large corporates never really manage to borrow at the 3% personal loans are given to individuals. 5% - 10% in the same market have been usual for the longer term debt.

I still think that the problem is that the assets are not priced according to their actual market value. 

What company would buy, say Regal Princess,  for the asset value as stated in  the Carnival accounts? 

[molecrochip]

12 hours ago, wowzz said:

I still think that the problem is that the assets are not priced according to their actual market value. 

What company would buy, say Regal Princess,  for the asset value as stated in  the Carnival accounts? 

Companies are required to prepare their accounts to give a true and fair view - this includes the value of their assets.

 

Carnival depreciate their ships over a 30 year life assuming a 15% residual value at the end. So rough numbers, thats 2.83% a year x 8.5 years = 24% depreciation to date. The ships cost approximately €600m each, so Regal's value at the last year end would be €456m. The company have not detailed any material impairment of this valuation so it should be taken as accurate.

 

This is where life gets difficult because if someone did come along and offer €600m today for Regal, the 'bean-counters' would advise that the offer is too good not to take - even for a modern ship.

 

However, no one is likely to pay €600m for Regal. The truth is, ships rarely leave a group before they are 20 years old unless the group/company/brand is sold en-batch. Given that a Royal class ship has never come to market, nor has an equivalent size/age ship, its difficult to attribute an actual market value.

[BouncingWheel]

10 hours ago, molecrochip said:

so Regal's value at the last year end would be €456m.

 

10 hours ago, molecrochip said:

The truth is, ships rarely leave a group before they are 20 years old unless the group/company/brand is sold en-batch. Given that a Royal class ship has never come to market, nor has an equivalent size/age ship, its difficult to attribute an actual market value.

And therein lies the problem I think and why on paper the shares can currently look undervalued (as you excellently explained) but if Carnival wanted/needed, for example, to offload the whole Princess brand there are not buyers around in the current climate for those ships at the balance sheet value and Carnival would have to take a loss. This is probably why the shares are where there are and will only start to move up when either confidence in the whole industry increases and ships get bought & sold readily again and/or Carnival sees increases in profits and it's debt, as you mentioned, refinanced at lower rates.

[crompton21]

19 hours ago, molecrochip said:

Companies are required to prepare their accounts to give a true and fair view - this includes the value of their assets.

 

Carnival depreciate their ships over a 30 year life assuming a 15% residual value at the end. So rough numbers, thats 2.83% a year x 8.5 years = 24% depreciation to date. The ships cost approximately €600m each, so Regal's value at the last year end would be €456m. The company have not detailed any material impairment of this valuation so it should be taken as accurate.

 

This is where life gets difficult because if someone did come along and offer €600m today for Regal, the 'bean-counters' would advise that the offer is too good not to take - even for a modern ship.

 

However, no one is likely to pay €600m for Regal. The truth is, ships rarely leave a group before they are 20 years old unless the group/company/brand is sold en-batch. Given that a Royal class ship has never come to market, nor has an equivalent size/age ship, its difficult to attribute an actual market value.

My understanding of the accounts led me to believe that the funding costs of the ship are also capitalised, or at least that’s what I think the accounts say.  As the duration of the loans are significantly shorter than the 30 year write down period the interest costs are consequently still hitting the P&L long after the actual payments have been made.  I seem to remember some analysis of this pre covid with some analysts not being entirely comfortable with it.

 

 

[Harry Peterson]

Having ignored all my previous self warnings about buying shares for the perks and bought at around the £40 mark, at which point all the predictions were upwards, this has been a costly exercise!  I’ve mentally written off the lot now - just one of those things, and a warning not to buy shares unless you’re prepared to lose the lot.

 

Having said that, though, the Barratt shares bought for similar reasons a long time ago when we were moving frequently (never used the discount in the end though) have been the best investment we ever made. Original cost repaid many times over and still producing sparking dividends!

[crompton21]

47 minutes ago, Harry Peterson said:

Having ignored all my previous self warnings about buying shares for the perks and bought at around the £40 mark, at which point all the predictions were upwards, this has been a costly exercise!  I’ve mentally written off the lot now - just one of those things, and a warning not to buy shares unless you’re prepared to lose the lot.

 

Having said that, though, the Barratt shares bought for similar reasons a long time ago when we were moving frequently (never used the discount in the end though) have been the best investment we ever made. Original cost repaid many times over and still producing sparking dividends!

 

As you say, this is now almost a binary outcome, not what you would have expected when you bought shares in a FTSE 100 company.

 

To answer the question in the title of this thread perhaps "should I buy shares in a loss making company that owes 30 billion dollars?" would help.  

[BouncingWheel]

27 minutes ago, crompton21 said:

To answer the question in the title of this thread perhaps "should I buy shares in a loss making company that owes 30 billion dollars?" would help.  

Probably said in jest but a bit harsh and that title would suggest a thread on financial advice and not financial comment which is what I took the original poster was aiming for. This thread has led to some good information for which I am grateful for.

.

 

[jeanlyon]

My husband who knows a thing or two as he was in the business tells me the markets have a long way to fall yet, especially the American Market.

[funinhounslow]

23 minutes ago, BouncingWheel said:

Probably said in jest but a bit harsh and that title would suggest a thread on financial advice and not financial comment which is what I took the original poster was aiming for. This thread has led to some good information for which I am grateful for.

.

 

I’d suggest it’s a more useful contribution than recommendations to purchase Carnival shares for the OBC “perk”, or predictions that the share price will go to £20-25 in the foreseeable future…

[davecttr]

32 minutes ago, funinhounslow said:

I’d suggest it’s a more useful contribution than recommendations to purchase Carnival shares for the OBC “perk”, or predictions that the share price will go to £20-25 in the foreseeable future…

Worked for me 😁

 

and another £300 from the next 2 cruises 😁

[funinhounslow]

1 hour ago, davecttr said:

Worked for me 😁

 

and another £300 from the next 2 cruises 😁

If anyone was lured into purchasing Carnival shares for OBC last Friday as a result of this thread they’re already over £100 down…

[davecttr]

50 minutes ago, funinhounslow said:

If anyone was lured into purchasing Carnival shares for OBC last Friday as a result of this thread they’re already over £100 down…

I presume they can make their own decisions based on what they want to get from their purchase

[jaydee6969]

I am interested but sitting on the fence.  They would be for future use rather than now, as despite having 8 cruises with P&O/Princess booked, I can not claim the OBC.  After a few emails with them, I can not use the shareholder benefit in conjunction with Friends & Family discounts (Note: not complaining). 

 

But I will only receive that for as long as we have a friend who works at Carnival House.

 

Looked previously, but at the higher price was too much of a luxury.  Now though @ 730p is a different proposition.

 

Now to go and find that crystal ball.

[Harry Peterson]

To answer the original question, which was “When will Carnival shares be worth buying”, my personal view, having lost around £3300 on them so far, would be very simple - when they’re around 10p and you’re happy to lose £10.

[devonuk]

My daughter bought 100 at £7.25 each today 😎

[ozzysdad]

I've bought 100 today at 729, with two cruises of 14 nights already booked it's a bit of a no brainer really.

[funinhounslow]

On 6/14/2022 at 2:47 PM, davecttr said:

I presume they can make their own decisions based on what they want to get from their purchase

To be fair, if anyone shares the same investment objectives as you (doubtful), then buying Carnival shares is probably a smart move… 

 

On 6/11/2022 at 7:38 AM, davecttr said:

I am not interested in increasing my net worth over a long period 

 

They’re currently bouncing around 700 this morning btw.

Edited June 16, 2022 by funinhounslow

[davecttr]

6 minutes ago, funinhounslow said:

To be fair, if anyone shares the same investment objectives as you (doubtful), then buying Carnival shares is probably a smart move… 

 

 

They’re currently bouncing around 700 this morning btw.

Yes, that investment has given me many weeks cruising enhancement, it was an investment in pleasure, not monetary gain and as such I class it as expenditure, just like my blackjack bankroll.  There comes a time in life when long term investment becomes less important. At age 71 there is a 75% chance of living at least another 9 years, better IMO to spend the money than to invest it in a future that you may never see or be to ill to enjoy anyway. 

 

So you see I still consider that £2200 spent on my Carnival shares as a good investment because I have had the money back and taken pleasure in spending it. The share price has little relevance now and I look forward to another £300 of OBC from my next 2 cruises. 😉

[dunnster1965]

15:12 Carnival shares at 660.00 down 9% on the day - eek!

[Eddie99]

£6.55

I believe the whole Stock Market is down?

Interest rates up

Ho hum

[zap99]

On 6/14/2022 at 11:37 AM, jeanlyon said:

My husband who knows a thing or two as he was in the business tells me the markets have a long way to fall yet, especially the American Market.

Pat on the back for Mr Jean. They have dropped 20% this week.👏

[Harry Peterson]

Interesting email from Hargreaves Lansdown today. 

 

I have an ISA with them, and it now contains just the one share (because I sold everything else last year, thinking the stock market was too high) - Carnival.

 

It started like this:

 

"Dear Mr Peterson,

 

Based on your current HL account, your portfolio could be a little risky.

We wanted to let you know taking more risk doesn’t always pay off, and offer some tips to help manage risk on your terms."

 

Do they know something I don't?  😉

 

 

[wowzz]

1 hour ago, Harry Peterson said:

Interesting email from Hargreaves Lansdown today. 

 

I have an ISA with them, and it now contains just the one share (because I sold everything else last year, thinking the stock market was too high) - Carnival.

 

It started like this:

 

"Dear Mr Peterson,

 

Based on your current HL account, your portfolio could be a little risky.

We wanted to let you know taking more risk doesn’t always pay off, and offer some tips to help manage risk on your terms."

 

Do they know something I don't?  😉

 

 

I think they know what we all know.

Cruise line stocks are basically worthless in the short to  middle term (and probably long term as well!)

[zap99]

29 minutes ago, wowzz said:

I think they know what we all know.

Cruise line stocks are basically worthless in the short to  middle term (and probably long term as well!)

I wonder at what price they will reduce the OBC?.

[wowzz]

1 minute ago, zap99 said:

I wonder at what price they will reduce the OBC?.

The obc is, in the scheme  of things,  irrelevant.  £160 obc probably costs Carnival £50. 

If they ever do away with it, we are all "doomed!".