Carnival (CCL 0.69%) (CUK 0.76%) experienced its very worst time when the pandemic forced its ships to shore. This period crushed revenue and pushed costs and debt higher. The world's biggest cruise operator gradually resumed its cruises more than a year ago. In fact, today more than 90% of the fleet is in service.

Yet Carnival shares continue to suffer. They recovered some lost ground last year. But increases didn't last. Concerns about higher interest rates and a weakening economy are weighing on the shares these days. They've lost about 50% year to date. Considering future prospects, should you buy Carnival before it rallies? Let's find out.

Taking on more debt

We'll start by taking a look at the bad news first. Cruise lines including Carnival took on more debt during the earlier stages of the pandemic as their ships remained inactive. Carnival's total long-term debt has swelled to more than $33 billion.

Today's rising interest rate environment isn't great news for companies with variable rate borrowings. For Carnival, rising rates may equal a 12.4% increase in total interest expenses this year, according to EuroFinance.

Higher rates and a difficult economy also may hurt consumers' wallets -- and that could get in the way of them booking cruise vacations. So today's economic picture isn't very supportive for Carnival and other cruise operators.

But all isn't completely grim. Carnival has come a long way over the past year. That progress shows in the most recent earnings report.

Carnival's cash from operations turned positive in the second quarter. Revenue climbed almost 50% from the first quarter. This is important because it shows sequential progress. And booking volumes for future sailing dates were double those seen in the previous quarter. Carnival also said these volumes were the best since the start of the health crisis.

The company expects this trend to continue. Carnival predicts gains in occupancy to build until occupancy reaches "historical levels" next year. Carnival forecasts positive adjusted EBITDA for the third quarter of this year.

Helping return on invested capital

Carnival also is making adjustments to reduce fuel consumption and better adapt its fleet to demand. The company has removed some smaller ships from the fleet. And it's delivered nine bigger, more efficient ships since 2019. Carnival says this move should help the company return to profitability. And it should help boost return on invested capital (ROIC).

ROIC, which took a dive during the earlier days of the pandemic, is an important point to watch. This financial metric is key because it shows how much a company is gaining on the investments it's made in its business.

CCL Return on Invested Capital Chart

CCL Return on Invested Capital data by YCharts

Now, let's consider our question: Should you buy Carnival before it rallies? It depends on your comfort with risk. We don't yet know how long the current economic situation will last. And it isn't favorable for cruise operators. That said, it is a temporary situation. Times of higher interest rates and economic difficulties don't last forever.

Carnival has made major progress over the past year. And pent-up demand for cruising still may work in its favor. The company also has more than $7.5 billion in liquidity to buoy it through any troubled times.

If you're uncomfortable with risk, you may be better off watching this investment from the dock. A lasting rally may not happen immediately. Further rate increases or longer-than-expected weakness in the economy could hurt Carnival shares.

But if you're an aggressive investor, you may want to take advantage of Carnival's price today. It's trading at less than 2 times sales. That's compared with more than 12 earlier this year. So, it may be a good idea to jump on board before this stock sets sail.