Carnival WACC - Weighted Average Cost of Capital
The WACC of Carnival Corp (CCL) is 8.7%.
| Range | Selected | |
| Cost of equity | 8.6% - 12.8% | 10.7% |
| Tax rate | 0.2% - 0.2% | 0.2% |
| Cost of debt | 5.0% - 7.0% | 6% |
| WACC | 7.1% - 10.4% | 8.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.02 | 1.42 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.6% | 12.8% |
| Tax rate | 0.2% | 0.2% |
| Debt/Equity ratio | 0.73 | 0.73 |
| Cost of debt | 5.0% | 7.0% |
| After-tax WACC | 7.1% | 10.4% |
| Selected WACC | 8.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CCL | Carnival Corp | 0.73 | 1.94 | 1.12 |
| HLT | Hilton Worldwide Holdings Inc | 0.17 | 0.97 | 0.83 |
| LIND | Lindblad Expeditions Holdings Inc | 0.89 | 2.08 | 1.1 |
| NCLH | Norwegian Cruise Line Holdings Ltd | 1.3 | 1.82 | 0.8 |
| PLYA | Playa Hotels & Resorts NV | 0.65 | 0.5 | 0.31 |
| PRSI | Portsmouth Square Inc | 88.81 | 0.52 | 0.01 |
| RCL | Royal Caribbean Cruises Ltd | 0.22 | 1.78 | 1.46 |
| TRZ.TO | Transat AT Inc | 19.1 | 0.55 | 0.03 |
| CCL.L | Carnival PLC | 0.71 | 1.96 | 1.15 |
| VIK1V.HE | Viking Line Abp | 0.4 | 0.32 | 0.23 |
| Low | High | |
| Unlevered beta | 0.6 | 0.94 |
| Relevered beta | 1.03 | 1.63 |
| Adjusted relevered beta | 1.02 | 1.42 |
Carnival's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for Carnival:
cost_of_equity (10.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.02) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.