Carnival Corporation, the globe’s largest cruise company, has been on quite a ride these past few years. Although its fortunes have improved lately, some remnants from tougher times still linger in the financial papers.
Compared to last year, Carnival is in a significantly better position—boasting higher revenues, a positive net income, and reduced debt levels. The company is also enjoying some relief from lower interest rates. So, where might things go from here in the next year or so?
Setting Sail
Carnival has been experiencing one record-setting quarter after another. While certain metrics like pricing and occupancy might not break records indefinitely, sales and net income still look set to climb, even if market demand cools off a bit.
Take the fiscal 2024 fourth quarter, ending on November 30, for example. Here are a few of the standout achievements:
- They achieved record revenue of $5.9 billion, which is a 10% increase from the previous year.
- Their adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) hit a record $1.2 billion, up 29% year-over-year.
- Net yields reached an all-time high, increasing by 6.7% compared to last year.
- For the full year of 2025, Carnival’s cumulative advanced bookings hit a new peak.
- The fourth quarter also saw record-breaking bookings for 2026.
Though net income wasn’t at a record high, it was positive—a significant turnaround from previous years. They reported a net income of $303 million in the fourth quarter, swinging from a $48 million loss the prior year, and an impressive $1.9 billion for the entire year. With reservation rates and onboard spending ascending, Carnival is achieving stronger profits thanks to these higher ticket prices. In 2025, projections suggest net yields might improve by 4.2%, with adjusted net income anticipated to reach $2.3 billion.
Preparing to meet and stoke demand even further, Carnival recently introduced three new ships and is unveiling two exclusive Caribbean destinations. Their marketing tactics proved fruitful, boosting paid search clicks by 60% and website visits by 40%, a move likely to keep demand robust.
Looking a year ahead, I anticipate a boost in revenues, rising net income, and steady demand. There’s a fair chance that this high demand could extend into 2026, with bookings stretching out to 2027. Much of this depends on the trajectory of interest rates and broader economic cues. If rates dip, consumer spending might rise. But if the economic climate holds steady as it is, demand might stabilize.
Dealing with Debt
One looming shadow for Carnival is its debt. It’s still quite high, wrapping up 2024 at $27.5 billion. This isn’t without risk; if demand dips before they can lower this debt, it could hinder the company’s ability to responsibly pay it down.
While such debt levels could stall the rising stock, reducing the debt is likely to push it upwards. Over the last five years, there’s been an interesting correlation between stock movement and debt levels, especially over the past two years.
Financially, the business is bouncing back, and the net debt-to-EBITDA ratio improved significantly from 6.7 in 2023 to 4.3 in 2024. Management anticipates a further drop to 3.8 this coming year.
Fast forward a year, Carnival’s debt might be reduced, though not eliminated entirely, and its stock price should mirror this progress. Should interest rates fall, expect the stock to climb higher. Patient investors who hop on board now might see their investments slowly, but surely, rise back to old heights, and possibly surpass them.
