"Don't move that limbo bar
You'll be a limbo star
How low can you go?"
-- "Limbo Rock," Chubby Checker (1963 hit record)

It's still peak season for the cruise industry, as snowbirds -- the name Floridians apply to sun-worshipping winter visitors -- flock to the warm waters courtesy of cruise industry heavyweight Carnival (NYSE:CCL).

The company announced this morning that, compared with last year's first quarter, its revenue rose 21% and net income boomed by 70%. No "how low can you go?" limbo puns warranted there! (Aside from earnings being bolstered $0.01 by a legal settlement.)

That net income number is impressive. First, besides being a record, it eclipsed analyst estimates by two cents. Second, earnings were reduced four cents because a 103-day world cruise was canceled -- and refunds given -- when a ship's propulsion system had technical problems. Finally, the numbers show that high fuel costs didn't sink net income the way they did at major competitor Royal Caribbean (NYSE:RCL).

Given pole-vaulting fuel prices, it's also good news that bookings for the next nine months are ahead of last year's and, better yet, are being made at higher prices.

But all of this good news is tempered by analysts' expectations of earnings per share of $2.78 in 2005 -- giving the stock a forward price-to-earnings of 18.9 -- while the company is still signaling $2.70 a share. Still, that's a nice 20% jump from $2.25 last year, but the news has weighed the stock down by close to 5% this afternoon.

A dark cloud on the horizon is the British Merchant Navy Officers Pension Fund liability that the company assumed when it acquired the P&O Princess company. That cost, estimated at between $26 million and $113 million, is still pending. But this is not new news, and logically, it should be priced into the stock. The real question is the extent to which share prices are reflective of this expected liability.

For sunnier news, consider that 2006 earnings are expected to jump by 14.2% -- dropping the forward-earnings-multiple limbo bar lower, to 16.2 times earnings.

Before jumping into these investment waters, though, consider that Carnival carries a net debt (debt minus cash) of $7.2 billion. That includes the portion of long-term debt currently due, and it's almost a full year's worth of revenues!

Investors spooked by that might want to consider Motley Fool Rule Breakers recommendation and on-ship spa operatorSteiner Leisure (NASDAQ:STNR). With a 16.5 forward (2006) earnings multiple and a net cash balance (i.e., more cash than debt), Steiner would provide cruise-industry exposure without an overexposure to debt.

Fool contributor W.D. Crotty does not own stock in any of the companies mentioned. Click here to see The Motley Fool's disclosure policy.