Is Carnival Stock a Buy, Sell, or Hold in 2025?

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Shares of Carnival (NYSE: CCL) have rallied to a spectacular 92% gain this year amid a string of better-than-expected quarterly results. Compared to the pandemic-era disruptions, the cruise line giant has converted strong booking activity and higher pricing into an impressive financial comeback story.

Investors have plenty to celebrate with the stock currently trading at a 52-week high. But can this party boat keep delivering positive returns?

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Let's discuss what to do with Carnival stock heading into 2025.

The case to buy or hold Carnival stock now

Carnival is benefiting from a cruise industry renaissance with data showing this form of travel and leisure is more popular than ever. More people are taking a cruise for the first time and traveling more often, while willing to pay a premium for that dream vacation.

The setup has been great news for Carnival, which invested heavily to capture the booming demand by adding capacity to break several pre-pandemic records this year. In the last reported third quarter (for the period ended Sept. 30), Carnival held $6.8 billion in customer deposits for future cruises, up $500 million from the prior-year quarter and 39% higher than Q3 2019.

The performance metric that stands out is Carnival's guidance for 2024 net yield (a fancy industry term measuring the average revenue earned per capacity per day). It's projected to climb by 10.4% from 2023, even as the per-day adjusted cruise cost increases by just 3.4%. That spread highlights the company's success in hiking prices while controlling expenses.

Steps to modernize the fleet with bigger and more feature-packed ships have translated into a more premium product generating higher profitability margins.

Two people standing on hillside observing the natural scenery.
Image source: Getty Images.

The company forecasts 2024 adjusted EBITDA of $6 billion, representing a 40% increase from 2023. The target for full-year adjusted earnings per share of $1.33 is set to turn consistently positive from the $0 result in 2023.

Management is optimistic about 2025, as Carnival's "Celebration Key" -- the newest exclusive resort-style destination in the Caribbean -- begins contributing higher yields.

Investors who are confident Carnival remains in the early stages of a significant long-term growth opportunity have a good reason to own the stock and expect more upside to the rally.

The case to sell Carnival stock now

As favorable as the outlook for Carnival may appear, it's always important to take a critical look and reflect on what could go wrong.