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Carnival Stock Up 9% in 3 Months: Is It Worth Buying Now?
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Carnival Corporation & plc (CCL - Free Report) stock moved up 9.4% in the past three months compared with the industry’s 3.5% rise and 6.4% growth of the Zacks S&P 500 composite. Investor sentiments are buoyed by robust booking momentum for 2025, with record volumes surpassing 2024 levels in price and occupancy.
But Carnival isn’t the only company riding the wave of a cruise tourism boom — Royal Caribbean Cruises Ltd. (RCL - Free Report) jumped 13.2%, Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) gained 9.4%, and OneSpaWorld Holdings Limited (OSW - Free Report) inched up 1.4% during the same period.
Image Source: Zacks Investment Research
The cruise industry is on a hot streak, bouncing back faster than other travel sectors. With 31.5 million passengers setting sail in 2023 and 35.7 million expected in 2024 (per CLIA), the future looks nothing short of spectacular for cruising.
Currently trading 15.8% below its 52-week high of $19.74, the big question is — is now the time to buy Carnival stock? Let’s dive into what’s fueling the stock’s momentum and if Carnival is worth the investment.
What’s Powering Carnival’s Growth?
CCl reported strong booking momentum for 2025, with record volumes surpassing 2024 levels in price and occupancy. During the fiscal second quarter, it reported higher pricing on bookings due to limited remaining inventory for 2024. It reported strength in pricing for the North America and Australia (NAA) and Europe segments for the third and the fourth quarter of 2024 on a year-over-year basis. With occupancy rates now surpassing 2023 levels, the company is on track to keep this winning streak alive.
As of May 31. 2024, total customer deposits amounted to $8.3 billion compared with $7 billion reported in the previous quarter, exceeding $7.2 billion reported on May 31. 2023. CCL expects to maintain mid-single-digit per diem growth through the rest of the year. Its focus on optimizing the yield curve is likely to benefit in future periods.
During the second quarter, the company reported successful delivery of new vessels, including Queen Anne, Sun Princess and Carnival Firenze, each marked by significant media coverage and booking records. These additions strengthen the company’s fleet and enhance yields and guest satisfaction. The rollout of Starlink technology across the fleet further improves onboard connectivity, benefiting guests, crew and operational systems.
It continues to manage its portfolio actively, with plans to sunset the P&O Cruises Australia brand early next year. This move will optimize CCL’s presence in the Australian market by consolidating into Carnival Cruise Line, increasing capacity and operational flexibility. Carnival Cruise Line's capacity is expected to grow by 50% over 2019 levels by 2028, supported by the addition of nine new ships since 2019 and the delivery of two Excel-class ships in 2027 and 2028.
CCL Guidance Upgrades Fuel Investor Confidence
The company’s consistent performance, strong booking position and strategic initiatives are driving confidence. For the fiscal 2024, it anticipates adjusted EBITDA to be approximately $5.83 billion compared with the previous expectation of $5.63 billion. Adjusted net income during the year is anticipated to be nearly $1.55 billion, up from the previous expectation of $1.3 billion.
CCL projects long-term targets of EBITDA per available lower berth-day (ALBD) of $69, 12% return on invested capital (ROIC) and a 20% reduction in carbon intensity by 2026. Upwardly revised guidance positions the company to achieve these targets ahead of schedule.
In the fiscal 2024, the company expects adjusted earnings per share (EPS) to be $1.18 compared with the previous expectation of 98 cents. The Zacks Consensus Estimate for RCL’s 2024 and 2025 EPS has moved up 3.5% and 1.3%, respectively, in the past 60 days. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.
Image Source: Zacks Investment Research
Risks to Consider
Carnival’s business model is inherently sensitive to macroeconomic factors, including consumer discretionary spending, geopolitical tensions, and currency fluctuations. Despite recent successes, the company’s stock remains highly volatile and susceptible to negative market sentiment. Economic uncertainties, such as inflationary pressures or a potential slowdown in consumer spending, could directly impact Carnival’s ability to maintain its pricing strategy and fill its expanding fleet.
One of the primary concerns with Carnival is its heavy debt load and ongoing financial restructuring. During the second quarter of 2024, Carnival prepaid $1.6 billion in secured term loans, refinanced approximately $2.75 billion and issued $535 million in new unsecured notes. While these measures aim to reduce interest expenses and simplify the capital structure, Carnival’s debt remains substantial. The company remains cautious of net interest expenses and their potential impact on the bottom line in the foreseeable future.
Valuation: A Bargain or a Risk?
With a forward 12-month price-to-earnings of 11.64, which is well below the industry average of 15.97X, the stock presents a potentially attractive valuation for investors.
Image Source: Zacks Investment Research
Technical indicators are not supportive of Carnival's strong performance. As of Wednesday, the stock is trading for $16.63 below its 50-day moving average of $16.76. This underperformance could indicate a lack of strong momentum in the near term, suggesting a cautious outlook.
Image Source: Zacks Investment Research
The Final Call: Should You Buy Carnival Stock?
The Zacks Rank #3 (Hold) company’s recent stock rally, driven by strong booking momentum, strategic fleet expansion and optimistic guidance revisions, reflects a positive market sentiment. Its efforts to enhance operational efficiency and streamline its portfolio are commendable, positioning it well for future growth. The stock’s attractive valuation compared with industry peers suggests a potentially compelling investment opportunity.
However, inherent risks tied to Carnival’s substantial debt load, exposure to macroeconomic uncertainties and the highly volatile nature of its business model cannot be overlooked. While the stock appears undervalued, these vulnerabilities might continue to put pressure on the company’s financial stability and market performance.
Current shareholders might want to hold their positions, while new investors should consider keeping an eye out for a better entry point.
Image: Bigstock
Carnival Stock Up 9% in 3 Months: Is It Worth Buying Now?
Carnival Corporation & plc (CCL - Free Report) stock moved up 9.4% in the past three months compared with the industry’s 3.5% rise and 6.4% growth of the Zacks S&P 500 composite. Investor sentiments are buoyed by robust booking momentum for 2025, with record volumes surpassing 2024 levels in price and occupancy.
But Carnival isn’t the only company riding the wave of a cruise tourism boom — Royal Caribbean Cruises Ltd. (RCL - Free Report) jumped 13.2%, Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) gained 9.4%, and OneSpaWorld Holdings Limited (OSW - Free Report) inched up 1.4% during the same period.
Image Source: Zacks Investment Research
The cruise industry is on a hot streak, bouncing back faster than other travel sectors. With 31.5 million passengers setting sail in 2023 and 35.7 million expected in 2024 (per CLIA), the future looks nothing short of spectacular for cruising.
Currently trading 15.8% below its 52-week high of $19.74, the big question is — is now the time to buy Carnival stock? Let’s dive into what’s fueling the stock’s momentum and if Carnival is worth the investment.
What’s Powering Carnival’s Growth?
CCl reported strong booking momentum for 2025, with record volumes surpassing 2024 levels in price and occupancy. During the fiscal second quarter, it reported higher pricing on bookings due to limited remaining inventory for 2024. It reported strength in pricing for the North America and Australia (NAA) and Europe segments for the third and the fourth quarter of 2024 on a year-over-year basis. With occupancy rates now surpassing 2023 levels, the company is on track to keep this winning streak alive.
As of May 31. 2024, total customer deposits amounted to $8.3 billion compared with $7 billion reported in the previous quarter, exceeding $7.2 billion reported on May 31. 2023. CCL expects to maintain mid-single-digit per diem growth through the rest of the year. Its focus on optimizing the yield curve is likely to benefit in future periods.
During the second quarter, the company reported successful delivery of new vessels, including Queen Anne, Sun Princess and Carnival Firenze, each marked by significant media coverage and booking records. These additions strengthen the company’s fleet and enhance yields and guest satisfaction. The rollout of Starlink technology across the fleet further improves onboard connectivity, benefiting guests, crew and operational systems.
It continues to manage its portfolio actively, with plans to sunset the P&O Cruises Australia brand early next year. This move will optimize CCL’s presence in the Australian market by consolidating into Carnival Cruise Line, increasing capacity and operational flexibility. Carnival Cruise Line's capacity is expected to grow by 50% over 2019 levels by 2028, supported by the addition of nine new ships since 2019 and the delivery of two Excel-class ships in 2027 and 2028.
CCL Guidance Upgrades Fuel Investor Confidence
The company’s consistent performance, strong booking position and strategic initiatives are driving confidence. For the fiscal 2024, it anticipates adjusted EBITDA to be approximately $5.83 billion compared with the previous expectation of $5.63 billion. Adjusted net income during the year is anticipated to be nearly $1.55 billion, up from the previous expectation of $1.3 billion.
CCL projects long-term targets of EBITDA per available lower berth-day (ALBD) of $69, 12% return on invested capital (ROIC) and a 20% reduction in carbon intensity by 2026. Upwardly revised guidance positions the company to achieve these targets ahead of schedule.
In the fiscal 2024, the company expects adjusted earnings per share (EPS) to be $1.18 compared with the previous expectation of 98 cents. The Zacks Consensus Estimate for RCL’s 2024 and 2025 EPS has moved up 3.5% and 1.3%, respectively, in the past 60 days. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.
Image Source: Zacks Investment Research
Risks to Consider
Carnival’s business model is inherently sensitive to macroeconomic factors, including consumer discretionary spending, geopolitical tensions, and currency fluctuations. Despite recent successes, the company’s stock remains highly volatile and susceptible to negative market sentiment. Economic uncertainties, such as inflationary pressures or a potential slowdown in consumer spending, could directly impact Carnival’s ability to maintain its pricing strategy and fill its expanding fleet.
One of the primary concerns with Carnival is its heavy debt load and ongoing financial restructuring. During the second quarter of 2024, Carnival prepaid $1.6 billion in secured term loans, refinanced approximately $2.75 billion and issued $535 million in new unsecured notes. While these measures aim to reduce interest expenses and simplify the capital structure, Carnival’s debt remains substantial. The company remains cautious of net interest expenses and their potential impact on the bottom line in the foreseeable future.
Valuation: A Bargain or a Risk?
With a forward 12-month price-to-earnings of 11.64, which is well below the industry average of 15.97X, the stock presents a potentially attractive valuation for investors.
Image Source: Zacks Investment Research
Technical indicators are not supportive of Carnival's strong performance. As of Wednesday, the stock is trading for $16.63 below its 50-day moving average of $16.76. This underperformance could indicate a lack of strong momentum in the near term, suggesting a cautious outlook.
Image Source: Zacks Investment Research
The Final Call: Should You Buy Carnival Stock?
The Zacks Rank #3 (Hold) company’s recent stock rally, driven by strong booking momentum, strategic fleet expansion and optimistic guidance revisions, reflects a positive market sentiment. Its efforts to enhance operational efficiency and streamline its portfolio are commendable, positioning it well for future growth. The stock’s attractive valuation compared with industry peers suggests a potentially compelling investment opportunity.
However, inherent risks tied to Carnival’s substantial debt load, exposure to macroeconomic uncertainties and the highly volatile nature of its business model cannot be overlooked. While the stock appears undervalued, these vulnerabilities might continue to put pressure on the company’s financial stability and market performance.
Current shareholders might want to hold their positions, while new investors should consider keeping an eye out for a better entry point.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.