Carnival (CCL 4.38%) (CUK 4.20%) 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.

1. It’s experiencing record demand

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.

Image source: Getty Images.

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.

2. It’s investing for the future to keep it that way

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.

Carnival has two other experiences ready to roll out next year — RelaxAway and Isla Tropicale. These innovations can attract new users and feature new ways to vacation for repeat customers to keep high demand steady. It’s also launching a new membership program to achieve loyalty and drive more repeat business.

3. It’s almost at investment grade

As risky as it is for Carnival to hold so much debt right now, management has been paying it down efficiently. Although it stands at more than $27 billion as of the end of Q2, that’s nearly $10 billion off its peak total debt of $32 billion at the end of 2022. In Q2, it prepaid $350 million and refinanced another $1 billion at better rates.

Also in Q2, it got two upgrades from rating companies Fitch and S&P Global after getting an upgrade from Moody’s in Q1. It’s now one notch away from an investment-grade rating.

Due to the current risk, Carnival stock trades at the cheap, forward, one-year price-to-earnings (P/E) ratio of 12 and a price-to-sales (P/S) ratio of just over 1.

Carnival is demonstrating its resilience right now, becoming stronger through adversity. Not only is profitability coming back, but in Q1, it reported its highest operating margin in almost 20 years. These are the kinds of qualities you want to see in a great company.

Carnival won’t stay cheap forever, and now appears to be an excellent time to buy shares.

Carnival Corp. (CCL 7.63%) posted solid top- and bottom-line quarterly growth, topping Wall Street expectations.

Investors are saying full steam ahead, sending shares of Carnival up 9% as of 10 a.m ET.

Image source: Carnival.

Better-than-expected results

With so much talk of tariffs and economic uncertainty, there was every reason to worry about cruise line stocks and other travel companies heading into earnings season. But Carnival delivered for investors, posting earnings per share of $0.35 and revenue of $6.3 billion, well ahead of Wall Street’s consensus estimate of $0.24 per share on sales of $6.2 billion.

If some potential customers did back out, it appears Carnival had no trouble backfilling that inventory. Revenue was up 10% year over year, and Carnival ended the quarter with an all-time high of $8.5 billion in customer deposits.

The company said it topped its fiscal 2026 financial targets 18 months ahead of schedule, posting a return on invested capital that, at 12.5%, is the highest level in nearly two decades.

Is Carnival stock a buy?

Management is optimistic about the quarters to come. Carnival is forecasting full-year net yields about 5% above 2024 levels, and now expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be about 10% better than last year.

“Our strong results, booked position and outlook are a testament to the success of our ongoing strategy to deliver same-ship, high-margin revenue growth,” CEO Josh Weinstein said in a statement. “We continue to set ourselves up well for 2026 and beyond, with so much more potential to take our margins, returns and results even higher over time.”

Carnival sees no macro tidal wave looming. If that’s the case, the stock could cruise higher from here.

Leisure and entertainment giants Carnival (CCL -2.59%) and The Walt Disney Company (DIS 0.58%) offer an abundance of options for anyone thinking about taking a vacation this summer. The two companies can also represent compelling investments, with both stocks gaining momentum in recent months.

Can the rally keep going? Let’s discuss whether shares of Carnival or Disney are the best buy for your portfolio right now.

Image source: Getty Images.

The case for Carnival stock

As the world’s largest cruise line operator, Carnival is capitalizing on an industry renaissance, with data suggesting that this form of vacation travel is more popular than ever. Efforts to optimize its fleet and enhance financial efficiency are paying off, with the company posting multiple operating records.

In the first quarter (for the period ended Feb. 28), Carnival management noted “incredibly strong demand,” which helped results outperform prior guidance. Revenue of $5.8 billion increased 7.5% year over year, fueled by climbing capacity and higher pricing. Carnival ended the quarter with $7.3 billion in customer deposits for future voyages, surpassing last year’s $7 billion record.

Even more impressive has been Carnival’s ability to control costs, translating into surging profitability. Adjusted earnings per share (EPS) of $0.13 reversed a loss of $0.14 in the prior-year quarter, underscoring the company’s newfound financial consistency. The expectation is for these trends to continue. The launch of Celebration Key, a new private island destination opening in July, and the delivery of three new ships by 2028 should drive further growth.

Carnival is guiding for full-year EPS of $1.83, representing $2.5 billion in adjusted net income and marking a 29% increase from 2024’s result. The outlook is encouraging as it should allow the company to improve its balance sheet. The current total debt position of $27 billion is favorably down $4 billion over the past year. Deleveraging should support a higher valuation for Carnival stock, which trades at just 13 times its 2025 EPS forecast as a forward price-to-earnings (P/E) ratio, notably at a large discount to Disney stock’s forward P/E of 20.

The attraction of Carnival as an investment is its combination of compelling value and growth potential. Investors confident that Carnival is sailing in the right direction have plenty of reasons to own the stock for the long run.

CCL PE Ratio (Forward) data by YCharts.

The case for Disney stock

The last few years have been far from a fairytale for Disney shareholders, as the media giant has navigated numerous challenges. Despite record results from its experiences segment that includes the theme park empire and the growing cruise line business, the entertainment business has been forced to contend with volatile box office trends and a reset of expectations in streaming.

Disney stock is down 7% over the past five years, marking a major underperformance compared to the broader market. Yet, the latest trends point to what may finally be the start of a sustained comeback.

In Disney’s fiscal Q2 (for the period ended March 29), revenue increased 7% year over year while adjusted EPS surged 20%. The big story was the robust momentum from the streaming offerings where Disney+ added 1.4 million customers during the quarter, brushing aside concerns that recent price hikes would push subscribers away.

Hulu and the ESPN digital properties have also been growth drivers, with Wall Street cheering Disney’s efforts to bundle packages. Disney is targeting EPS of $5.75 for fiscal 2025, an increase of 16% from last year, with management projecting optimism that the company’s strategic initiatives are gaining traction.

Compared to Carnival, Disney stock benefits from its more diversified profile backed by a globally recognized brand. Ultimately, investors who believe the company is just getting started on its plan to dominate streaming media have a great reason to buy the stock today for a diversified portfolio.

Verdict: Carnival is my pick

Picking between Carnival and Disney as the better stock to buy is tough, as I’m bullish on both and predict each will deliver positive returns in the second half of the year. If forced to pick just one, I predict Carnival stock will outperform on the upside. In my view, Carnival’s growth story is still underappreciated by the market, which means its stock may be undervalued and could be poised to break out higher.

Carnival (CCL 1.83%) (CUK 1.88%) is the largest cruise operator in the world, but this industry leader has had a rough few years. Its business has rebounded, but there are some leftover effects that are still weighing on its financial statements.

It’s in a much better place than it was last year at this time, with higher revenue, positive net income, and lower debt. It’s also benefiting from lower interest rates. Let’s see where it could be in a year from now.

Setting sail

Carnival continues to report record quarter after record quarter. Some of the records can’t go on forever, like price and occupancy, but it should be able to keep growing sales and net income, even if demand moderates.

The fiscal 2024 fourth quarter (ended Nov. 30) was the most recent example. Here’s a rundown of some of the highlights:

• Record revenue of $5.9 billion, up 10% year over year
• Record fourth-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.2 billion, up 29% year over year
• Record net yields, up 6.7% year over year
• Cumulative advanced booked position was at a record for the 2025 full year
• Booked position for 2026 broke previous records in the fourth quarter

Net income wasn’t a record, but it was positive, and that had been escaping Carnival for several years. It reported positive net income of $303 million in the fourth quarter, up from a $48 million loss the year before, and $1.9 billion for the full year. Carnival is in its best-ever booked position for both price and occupancy, coming from higher ticket prices and higher on-board spending, and this is exceeding unit cost and leading to higher profits. For 2025, management is guiding for net yields to improve by 4.2% and adjusted net income of $2.3 billion.

Carnival is setting itself up to meet demand and generate more. It got three new ships last year, and it’s opening up two new exclusive destinations in the Caribbean. Its advertising campaigns resulted in a 60% increase in paid search clicks and a 40% increase in web visits, which is a strategy that should fuel further demand.

In a year from now, I would envision higher revenue, increasing net income, and strong demand. It’s entirely possible that the high demand streak continues into 2026, with bookings out through 2027. It could depend on interest rate moves and other economic trends. If interest rates keep declining, consumer spending could increase. If things stay the same way they are today, demand could begin to stabilize.

Dealing with debt

The main negative factor that continues to plague Carnival is its debt. The debt remains well above its historically normal levels, ending 2024 at $27.5 billion. That creates risk, because demand could wane before the debt is paid off, limiting the company’s ability to pay it back responsibly.

With this debt level, Carnival stock may not continue its climb, but it is likely to rise as the debt is reduced. This is how the stock has moved over the past five years, since Carnival assumed the high debt. Notice how the stock has moved conversely with the debt level over the past two years.

CCL data by YCharts

The debt is coming down as the business improves, and the net debt-to-EBITDA ratio improved from 6.7 in 2023 to 4.3 in 2024. Management is expecting it to further decline to 3.8 this year.

One year from now, the debt is likely to be diminished but not gone. The stock price should reflect that. If interest rates go lower, the stock is likely to rise higher. Patient investors can buy today and benefit from the stock’s potentially slow but probable eventual rise back to previous highs and even higher.