QS Research · Michael Burry's Scion Capital analyst template · 2006
Carnival Corp Ltd. (CCL)
As of 2026-11-11 · 11/15 boxes filled from SEC filings and market data
Report price $30.74 (close 2026-11-10)
Conclusion: WATCH
Conviction low · base case +81% · downside -31% · upside +68%
The market is pricing Carnival at the NCLH multiple (2.34x EV/Sales, 8.8x EV/EBITDA) because of $23.34B of net debt and a +15.2% one-year share count, not because the earnings stream is impaired: TTM EBITDA of $7.31B is slightly above RCL's $7.14B on larger revenue. On the normalized FY2023-FY2025 average EBITDA of $5.91B (TTM $7.31B beside it), 8.8x gives $21.3/share (-31%) and 15.7x gives $51.7/share (+68%), while the code's independent anchor of 23.9x peer-median P/E on $3.14B TTM net income gives $55.66 (+81%). The problem is that the base case is almost entirely a re-rating: ROIC of 11.2% against a 9.3% WACC is only a +1.9-pt spread, capex is 50% of EBITDA, and the FCF yield of 7.7% is above the normalized $1.63B base, so the quality gate fails and the upside is not protected by a durable moat. With no dated catalyst that forces the multiple up and a downside that is a real -31%, this is a watch, not a long.
Key numbers
- Share price: $30.74
- Market cap: $41.33B
- Latest financial period: TTM to Aug 31, 2026
- Revenue (TTM): $27.59B
- EV / EBITDA (TTM): 8.8x
- P/E (TTM): 13.2x
- FCF yield: 7.7%
- Price / book: 2.91x
- Earnings-quality flags (TTM): none flagged
- P/E, operating (tax-normalized) (TTM): 9.5x
- EV / FCF (TTM): 20.4x
- Revenue growth (latest fiscal year): +6.4%
- ROIC (TTM): 11.2%
- WACC: 9.3%
- Economic profit spread: +1.9 pts
The 15 boxes
- ✓ 1. Long-form business notes
Carnival is a dual-listed cruise operator that earns ticket and onboard/other revenue across eight brands, with FY2025 passenger capacity split 64% North America and 36% Europe and 13.627 million passengers carried in 2025. The cycle is extreme: FY2021 revenue was $1.91B with a $7.09B operating loss, while FY2025 revenue was $26.62B with $4.48B operating income; TTM to Aug 2026 is $27.59B revenue and $4.41B operating income. Since the FY2020 10-K's pandemic pause and fleet removals, the company has resumed service, sunset P&O Cruises Australia in 2025, opened Celebration Key, and proposed unifying the DLC under Carnival Corporation/Bermuda. It sells through travel agents and direct channels, and Q3 is seasonally the largest operating-income quarter.
- ○ 2. Competitive advantage
The sources show a large-scale operator whose earnings have fully recovered from the pandemic trough — operating income of $4.48B in FY2025 and $4.41B on a TTM basis to 2026-08-31 — but they do not show any margin or return advantage over rivals: no cost, pricing or share data is given. What the filings do document is a capital-intensive, asset-heavy model (limited shipyard capacity, owned/leased destinations, heavy debt) competing with other cruise brands and with land-based vacations on experience, destinations and value, with capacity growth and port restrictions as the standing threats. Verdict from these sources: scale and asset base yes, demonstrable durable pricing power or cost edge no.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended Aug 31, 2026) was a record revenue quarter but a slightly lower operating-profit quarter: passenger ticket revenue +1.8% to $5.5B, onboard and other +6.7% to $2.9B, yet consolidated operating income fell $52M to $2.2B as fuel costs jumped (fuel cost per metric ton $826 vs $607). Net yields in constant currency rose 2.4% while gross margin yields fell 1.3%. Nine-month operating income was flat at $3.7B with net income up to $2.7B, helped by lower interest expense and flattered by the 2025 ship-sale gains not repeating. Cash generation is strong ($5.3B operating cash flow, nine months to Aug 2026), funding $929M of buybacks and $618M of dividends, and management gave numeric FY2026 and 4Q 2026 guidance.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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