CCL – Market expectations are for a positive inflection in Uniform ROA, but management may have concerns about booking demand, cost savings, and ship launches

• Carnival Corporation (CCL:USA) currently trades at a premium to UAFRS-based (Uniform) assets, with a 1.2x Uniform P/B. At these levels, the market is pricing in expectations for profitability to inflect positively, but management may have concerns about booking demand, cost savings, and the launch of Mardi Gras.
  

• Specifically, management may lack confidence in their ability to find efficiencies to reduce costs, evolve their advertising efforts with heavy utilization of direct mail, and continue driving record-breaking media coverage. Furthermore, they may have concerns about the launch of the new Mardi Gras ship, the relaunching of sailing with Carnival Horizon, and the sustainability of strong booking demand, particularly for their NAA and EA brands. Finally, management may lack confidence in their ability to meet their 40% carbon reduction target through LNG ships and they may have concerns about welcoming guests back onboard and the transfer of 8,000 berths from their Continental European brands to Carnival Cruise Line.