Government restrictions during the COVID-19 pandemic inflicted a lot of financial damage to many travel-related businesses, including cruise ship operator Carnival (CCL +2.96%). But after years of rebuilding, the company finally got its groove back.
In its fiscal 2024, ended Nov. 30, Carnival hit all-time high sales of $25 billion, a strong 15% year-over-year increase. Fiscal 2025 looks to deliver even better results, given the historically high occupancy rates for its bookings. This contributed to Carnival shares skyrocketing nearly 70% over the past 12 months through July 2.
There are many reasons to consider an investment in Carnival stock. Here's a look at three factors that make the cruise company a compelling long-term investment.
Image source: Getty Images.
Carnival's explosive revenue growth
Carnival's fiscal 2025 sales look likely to exceed the all-time high of $25 billion generated in 2024. The company experienced record revenue of $6.3 billion in its fiscal second quarter, ended May 31.
As a result, sales in 2025's first half reached $12.1 billion, up from the previous year's $11.2 billion. In fact, the company's revenue has been on an upswing since the worst of the pandemic passed and is now higher than pre-pandemic levels.
Data by YCharts.
Strong customer demand enabled Carnival to raise ticket prices, driving revenue higher. In addition, the price increase didn't dent onboard passenger spending, which rose 10% year over year to $2.2 billion in Q2.
But how long can this robust demand continue? After all, the impact of the Trump administration's constantly changing tariff policies casts a cloud of uncertainty over how consumers may adjust their spending.
The answer is that demand could increase for years. Industry trade organization Cruise Lines International Association predicts the number of sea-going passengers will expand from 2024's 34.6 million to 41.9 million by 2028. The rise in cruise travelers provides a tailwind to Carnival's ability to maintain sales growth.
This is illustrated in Carnival's 2026 advanced customer bookings, which matched 2025's record levels as of Q2. The cruise line reached an all-time high in customer deposits of $8.5 billion in the quarter.
NYSE: CCL
Key Data Points
Carnival's strengthening financials
Higher sales isn't the only boon to Carnival's business. Fiscal Q2 net income hit $565 million, an impressive increase from the year-ago quarter's $92 million.
Part of the company's net income growth is attributed to its recovery efforts following the financial challenges incurred during the pandemic. CFO David Bernstein stated, "We continued rebuilding an investment grade balance sheet, working aggressively to reduce interest expense, simplify our capital structure and manage our future debt maturities."
The company's efforts can be seen in the story of its long-term debt. Before the pandemic, this debt stood at $9.7 billion in its 2019 fiscal year. When the pandemic struck, the firm battled to stay afloat amid travel restrictions, and as a result, long-term debt ballooned to $28.5 billion by fiscal 2023.
That figure declined to $25.9 billion in fiscal Q2 of 2025. The lower outstanding balance means reduced debt costs, such as a drop in interest payment amounts, which contributed to Carnival's bottom-line improvement. The firm still has a lot of debt on its balance sheet, but it's showing that it is working to get that debt under control.
Its strengthening finances led Carnival to forecast a whopping 40% year-over-year increase in adjusted net income for its 2025 fiscal year. In 2024, Carnival achieved adjusted net income of $1.9 billion.
Carnival's compelling valuation
Carnival's share-price valuation is another appealing investment factor. To assess this, let's examine its price-to-earnings (P/E) ratio, which tells you how much investors are willing to pay for a dollar's worth of a company's earnings based on the trailing 12 months, and compare it against rival Royal Caribbean Cruises.
Data by YCharts.
Carnival's P/E multiple is not only lower than Royal Caribbean's, it has dropped significantly from a year ago. This indicates Carnival shares are a better value now than it was last year when its P/E ratio far exceeded its competitor's.
With a combination of strong sales, decreasing debt, and attractive stock valuation, Carnival has the potential to see its share price rise over time. Adding to this is the continued resilience in customer demand for cruise getaways. For investors with an eye toward the long term, these factors make Carnival stock one to buy and hold.
