I figured with the economy conditions are getting worse and worse despite all the fake media lies, things started to turn south. I figure the luxury would be what goes first. I picked CCL to short and before I can make my move, it actually went down almost 10%, the very next day.
I picked CCL based on debt. My line of thoughts was with the rising interest rates, those companies which have more debt, will have to pay more. And if margins were already marginal due to economic situation, then they will probably be the first to show stress signs.
From CCL I moved to the next two big ones, Royal Caribbean Cruises, RCL. Here is their year review under financial statements, it shows that the vast majority of their business is still in Europe. From their interactive analyst Center, we can see their top lever financials, including the debt. The long term debt is about 8 billion which I think might start to hurt if interest rate started going up. However, one need to be careful since this is a European company and most likely their rate is the ECB rate not the Feds.
The Norwegian Cruise Line Holdings NCLH Also has 6 billion in debt with a Debt to Equity ratio of 112 higher that that of RCL of 83.
All the charts above show some hurt that is going on on the market. Just like the Auto market.
Refs – just for honesty the editors clearly bunch of idiots.
https://www.fool.com/investing/2018/02/02/3-top-cruise-line-stocks-to-buy-now.aspx
RCL
Here is the last call
https://www.rclinvestor.com/financial-info/webcasts-presentations/
Slides
https://my.webcaster4.com/userfiles/f9f7a049-0940-40eb-82a6-489785a3f9a0/materials//RCL_1Q19_Earnings_Call_Presentation.pdf
The Cococay property
https://www.royalcaribbean.com/cococay-cruises
Once they start bragging about an “app” rest assured they have nothing else. Add to it the “I am really proud of our …. ” we are right there.
Oil prices was favorable to them.
All the questions are in the trenches and no real digging to help connect the lines on the financial statements like the “Changes In Other Operating Activities”.
https://finance.yahoo.com/quote/RCL/cash-flow?p=RCL
The company now has a negative cash flow. It has 11 billion+ total debt and 250 million cash. The cap is almost 26B so they cannot come to the rescue of the share price. Also, they will have to come with service debt. That is 6 years of revenue assuming they turn all earnings to cash flow. I think this is a good short particularly if the market start to turn a little.