Norwegian Cruise Line Holdings is trading at nearly $30 per share, with a total market cap of around $6.2 billion. It has the most expensive valuation at 15.7 times EV/EBITDA. Royal Caribbean, at nearly $33 per share, has around $7.1 billion in total market cap. It is valued at around 10.36 times EV/EBITDA.
Among the three, Norwegian Cruise Line Holdings is the most profitable company with an operating margin of 15.7%. The operating margin of Carnival ranked second at 12.1%, while Royal Caribbean’s operating margin was the lowest at 10.26%. Income investors might like Carnival the best with its highest dividend yield of 2.9%, while the dividend yield of Royal Caribbean is only 1.4%. NCL does not pay any dividends at the moment.
My Foolish take
Among the three, I would definitely go for Carnival Corporation (NYSE:CCL) for its highest dividend yield, reasonable valuation, and decent operating margin. However, the cruise business is not a good business to hold in a long run, as it would keep experiencing a fluctuating free cash flow in the future due to a high annual maintenance capital expenditure.
The article Should We Cruise on Carnival? originally appeared on Fool.com and is written by Anh HOANG.
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