Carnival Corp’s Stock (CCL) In Choppy Waters Ahead of Earnings, What To Expect

Carnival Corp’s stock (NYSE: CCL) is stuttering into it’s latest earnings report, with a 2.9% through the morning session bringing the YTD decline to an underwhelming 7.66%. This marks a shift from what had been a very bullish 2024, with CCL adding more than 40% on the year. With the company set to report earnings before tomorrow’s opening bell, the consensus expectation is for solid growth numbers out of the firm.

Analysts currently estimate earnings per share (EPS) of $0.24 for the current quarter, with projections ranging from $0.21 to $0.27. This would demonstrate considerable improvement on the $0.11 EPS reported in the same period last year. Revenue is projected to reach $6.21 billion, a 7.46% increase year-over-year.

The company has a track record of beating earnings, with each of the last four prints coming in to the upside. Here’s a closer look at the two most recent periods.

The first quarter of 2025 saw the company exceeding expectations with an adjusted EPS of $0.13 compared to an anticipated $0.02. Revenue also beat estimates, reaching $5.81 billion. This success was fueled by a 7.3% increase in net yields and a remarkable 40% year-over-year surge in EBITDA to $1.2 billion. These improvements in operating and EBITDA margins, surpassing even pre-pandemic 2019 levels, initially triggered a 5.8% rise in the stock price.

The fourth quarter of 2024 was also strong, with an adjusted EPS of $0.14, doubling consensus estimates and marking a significant turnaround from the previous year’s loss. Revenue increased by 10% year-over-year to $5.9 billion.

View From The Street

Operationally, Carnival has also been proactive in managing its debt and environmental impact. The company successfully refinanced $5.5 billion of debt, resulting in $145 million in annualized interest expense savings. Furthermore, Carnival is making strides towards its 2026 greenhouse gas target, achieving a 19% reduction in carbon intensity compared to 2019. These strategic initiatives are crucial for long-term sustainability and financial stability.

However, despite the generally positive outlook, some analysts remain cautious. The current dip in stock price could be indicative of broader market concerns, including potential economic slowdowns, geopolitical instability, or shifts in consumer spending habits. While Carnival has demonstrated resilience, the cruise industry remains vulnerable to external shocks, such as pandemics or economic recessions.

The average price target for Carnival’s stock is $28.55, with a high of $34 and a low of $21. Broadly speaking, the view on the street remains to the upside, yet the company will be expected to hit it’s marks in the print.

Why Is Carnival’s Stock Underperforming This Year?

A bearish mind could point to Carnival’s recent success being built on a post-pandemic surge in demand that may not be sustainable. The “revenge travel” phenomenon we saw kick in so strongly, where consumers splurged on travel experiences after being confined for extended periods, could even be waning.

As economic conditions tighten, there is also the possibility that discretionary spending, including cruises, may be among the first to be cut. Furthermore, while Carnival has made progress in reducing its carbon footprint, the cruise industry as a whole faces increasing pressure to address its environmental impact. Stricter regulations and changing consumer preferences could lead to higher operating costs and reduced demand in the long run.

The high debt load, even after refinancing, remains a significant concern, potentially limiting the company’s ability to invest in innovation and growth. While customer deposits are at record highs, these are essentially liabilities that need to be fulfilled, and any significant cancellations could quickly erode the company’s financial position.

Bull Case:

• Strong recent earnings performance exceeding analyst expectations.
• Positive revenue growth and increased onboard spending.
• Successful debt refinancing and cost-saving initiatives.
• Progress towards environmental sustainability goals.
• Record booking volumes for 2026 and high prices for 2025 bookings.
• Trading above both 50-day and 200-day SMAs signals potential upside.

Bear Case:

• Current stock price decline indicates market uncertainty.
• Vulnerability to external shocks such as economic downturns, pandemics, and geopolitical events.
• Potential unsustainability of the “revenge travel” phenomenon.
• Increasing pressure to reduce environmental impact leading to higher costs.
• High debt load limiting investment in innovation and growth.
• Reliance on customer deposits as liabilities that could be impacted by cancellations.