Positive "surprises" have often been short-lived with the cruise lines. CCL peaked just after their FY earnings beat. Dead cat bounce?
I've been watching CCL closely since I sold and still think it's best to wait. Those technicals just look awful. Or is that too predictable?
Also, at a $20b valuation, where's the margin of safety with an interest expense of more than $2b per annum? Even if we assume pre-pandemic operating margins of 15%, I feel there's a lot that can go against you. FWIW, best case it's a profit of about $1.5b which is half of what it was pre-pandemic. I just wouldn't pay more than $15b for it. Or maybe I'm just a tight SOB.
Look, demand is there. Undoubtedly. But there's also that Middle East situation that is going to negatively affect earnings and I have zero idea how that plays out.
All of that said, maybe this year is a Goldilocks year where both multiples and profits expand massively. I've seen crazier stuff. I reiterate that if you're buying for the next decade, you'll probably do ok but, in the short-term, there's lots of work to be done. And I think you're slightly overpaying.
(FWIW, opportunistic debt buybacks, a lower valuation and a de-escalation in the ME is really what I'm looking for before I go back for a third bite.) |
