CCL – Market expectations are for a positive inflection in Uniform ROA, but management may have concerns about vaccination progress, new ships, and cost savings

• Carnival Corporation (CCL:USA) currently trades at a premium to UAFRS-based (Uniform) assets, with a 1.3x Uniform P/B. At these levels, the market is pricing in expectations for profitability to positively inflect, but management may have concerns about the vaccination progress, the potential of their new ships, and maintaining cost savings
  

• Specifically, management may have concerns about the progress of COVID-19 vaccination efforts, the sustainability of bookings acceleration, and disruptions to their cruise operations in Europe. In addition, they lack confidence in their ability to maintain their cost savings and continue improving their advanced air quality systems. Furthermore, management may be concerned about their dependence on the U.S. market, projected cruise occupancy levels in 2022-2023, and their decision to build LNG-powered ships. Finally, they may be overstating their marketing capabilities as well as the potential of Princess Cruises’ Medallion Class, their ultra-luxury Seabourn cruise, and R&O’s flagship Iona