Carnival Stock Outruns Industry in Past Six Months: Should You Buy?
Shares of Carnival Corporation & plc CCL have gained 45.3% in the past six months, outperforming the industry’s 21.9% growth. This rally has been driven by strong demand, effective pricing strategies and targeted marketing efforts. With record bookings for 2024 and 2025, Carnival is positioned for continued growth, but is now the right time for investors to jump in?
Major Growth Drivers for CCL Stock
Strong Demand and Pricing Power
Carnival has seen a historic rise in both occupancy and pricing for 2025. All core deployments are now booked at higher prices than last year, and every brand within Carnival’s portfolio is benefiting from increased demand due to successful marketing campaigns. Carnival’s baseloading strategy — securing a high volume of early bookings — has allowed the company to raise prices confidently while maintaining robust occupancy levels.
Bookings for 2026 have also started strong, with record volumes in the past three months. This robust booking momentum for 2024, 2025 and 2026 contributed to a record third-quarter customer deposit. Total customer deposits as of Aug. 31 were $6.8 billion compared with $6.3 billion reported on Aug. 31, 2023. With nearly half of 2025 already booked, the company is well ahead of schedule, providing strong visibility into future revenue growth.
Competitive Edge Over Land-Based Vacations
A key driver behind Carnival’s success is its ability to capture market share from land-based vacations. Through strategic marketing efforts, supported by partnerships with travel agents, Carnival has effectively attracted both new and repeat customers. By addressing the perceived price gap between cruises and land-based vacations, Carnival has positioned itself as a more attractive alternative for travelers seeking value for money.
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What’s Next for Carnival?
Looking ahead, Carnival remains optimistic about the upcoming North American debut of the Sun Princess. It expects the initiative to attract more customers. The company’s expanding fleet and improved commercial performance are likely to sustain the upward trend in demand and revenues. Additionally, the introduction of the Bahamian destination Celebration Key in 2025 and further development at Half Moon Cay are expected to drive revenues.
With approximately 99% of 2024 ticket revenues already secured, the firm is well positioned to report Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $6 billion by 2024-end. Return on invested capital is projected to reach 10.5% in 2024. Attributes of strong demand, higher pricing across core deployments and a favorable occupancy position are likely to aid the company in the upcoming periods.
For fiscal 2024, the company anticipates adjusted net income to be nearly $1.76 billion, up from the previous expectation of $1.55 billion. In fiscal 2024, the company expects adjusted earnings per share (EPS) to be $1.33 compared with the previous expectation of $1.18.
Attractive Valuation
Despite its strong performance, Carnival’s stock presents a potentially attractive valuation. With a forward 12-month price-to-earnings ratio of 12.72, the stock is trading well below the industry average of 18.42x. This suggests that Carnival may be undervalued compared to its peers, offering an enticing entry point for investors seeking exposure in the stock.
Should You Buy Carnival Stock?
Carnival’s stock has outpaced the broader industry over the past six months, driven by strong fundamentals and forward-looking strategies. The company’s ability to consistently generate demand, coupled with pricing power, provides a solid foundation for continued growth. Also, its strong financial position and ability to capture market share from land-based vacations further reinforce its growth prospects.
With a favorable valuation compared with industry peers and upwardly revised earnings projections, CCL is well-positioned to deliver sustained growth and shareholder value. We believe that the Zacks Rank #1 (Strong Buy) stock is an ideal candidate for investors' portfolio addition.
Other Key Picks
Some other top-ranked stocks in the Zacks Consumer Discretionary sector are Norwegian Cruise Line Holdings Ltd. NCLH, DoubleDown Interactive Co., Ltd. DDI and Cinemark Holdings, Inc. CNK. NCLH & DDI sport a Zacks Rank #1 each, whereas CNK carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Norwegian Cruise Line has a trailing four-quarter earnings surprise of 5.7%, on average. The stock has rallied 56.3% in the past year. The Zacks Consensus Estimate for NCLH’s 2024 sales and EPS calls for growth of 9.8% and 127.1%, respectively, from the year-ago levels.
DoubleDown Interactive has a trailing four-quarter earnings surprise of 22.1%, on average. The stock has surged 89.5% in the past year. The Zacks Consensus Estimate for DDI’s 2024 sales and EPS indicates an increase of 12.6% and 15.8%, respectively, from the year-ago levels.
Cinemark Holdings has a trailing four-quarter earnings surprise of 145.9%, on average. The stock has increased 81.9% in the past year. The Zacks Consensus Estimate for CNK’s 2025 sales and EPS indicates an increase of 10.8% and 29.8%, respectively, from the year-ago levels.
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