Is CCL a trap?
Historically, CCL declines in recessions only to become a 2x within a year, >2x in a few years.
CCL, leading in the cruise vacation industry finds itself in a similar situation now: trading at new lows and a stirring recession.
So is it a buy now?
Well, comparing numbers to the past recessions, the Covid recession may have caused permanent damages.
1. Heavy dilutions. FY19, 680M out. Fy20, 1.06B. Currently, 1.24B. Oh, and expect it to rise with demand side issues and negative FCF.
2. Weak revenues. FY 19 $20.8B, FY 20, $5.6B, FY 21 $1.9B. Major issue for high capex companies.
3. Dividend. CCL had a good dividend history, but don't expect one any time soon.
Really, I believe the play is to let it play out, unless its price stupidly low. Taking 2019 earnings ($3B) with the current interest expense of $1.6B and 1.2B shares out, EPS would be 1.17 to 2019 4.32. CCL would need to outperform its good years to go even with its previous years.
What are your thoughts? |
