Jennifer Saibil, The Motley Fool
5 min read
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Carnival is reporting record demand and solid performance.
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It's rolling out new ships and attractions to keep demand high.
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It still has a high debt to pay off, but it's getting closer to normal debt levels.
Carnival (NYSE: CCL)(NYSE: CUK) continues to deliver impressive results, but its stock is still 64% off its all-time high. There's good reason for that; it has a huge debt that makes it risky.
But that isn't likely to stick around forever. If you have some appetite for risk, now's the time to buy before it pays off the debt and soars. Here are three reasons why Carnival stock looks ripe for buying today.
Carnival is the largest cruise operator in the world, and it's dealing with incredible demand for its industry-leading cruises. Over the past few years, as demand continues to soar and sales continue to increase, there have been various reasons investors have been worried that it would eventually slow down. It hasn't.
Sales have surpassed pre-pandemic levels, and they continue to grow. In the fiscal 2025 second quarter (ended May 31), revenue increased 8.6% year over year.
Demand is staying strong. It's remaining at historically high levels, with 93% of 2025 booked in its second-highest-ever position, and 2026 also booked at historic levels. Total deposits were a record $8.5 billion in Q2. Carnival is also benefiting from increased onboard sales of non-ticket items like food and entertainment. Clearly, these are engaged passengers.
Revenue is trickling down to the bottom line, which took a little longer to get back into the positive. Operating income nearly doubled year over year in Q2 to almost $1 billion, and adjusted net income more than tripled from last year, well above management's guidance. Earnings per share (EPS) of $0.35 beat internal guidance of $0.22 and crushed Wall Street's expectations for $0.25. Management raised guidance for net income and EPS for the full year.
All the worry about slowing down has been for naught up until now, but that doesn't mean the worry is going away. Management is making many moves to keep demand strong and stay in growth mode for the foreseeable future.
It has one new ship scheduled for delivery this year, and it's refitting some current ships with upgrades and new attractions. It has another four ships on order for delivery between 2027 and 2032.
The cruise line has been making a major marketing effort to generate buzz and interest in its new, exclusive asset called Celebration Key, a resort for Carnival guests in the Bahamas. It features beaches, shops, restaurants, and guest services, and it can accommodate two million guests annually, or two cruises at once, and it's launching in July.
