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Carnival Corporation & plc (CUK)
NYSE:CUK
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Carnival
(NYSE:CUK)
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Rating:72Outperform
Price Target:
$36.00
▲(53.39% Upside)
Action:ReiteratedDate:02/03/26
The score is driven primarily by the sharp improvement in profitability and sustained positive cash generation, supported by constructive technical momentum. This is tempered by continued balance-sheet leverage and only mid-range valuation support (P/E ~16), while the latest earnings call guidance and booking commentary adds a meaningful positive tilt despite identified 2026 risks.
Positive Factors
Consistent positive free cash flow
Sustained positive free cash flow signals the business can fund operations, capex and deleveraging without reliance on external equity. Over the next 2–6 months this underpins strategic flexibility: supports dividend resumption, targeted ship investment and ongoing debt reduction even in a cyclical leisure market.
Sharpened profitability and margins
A durable inflection to positive net and EBITDA margins indicates improved pricing power, cost control and operating leverage across brands. This structural improvement should sustain cash generation and ROE through the next 2–6 months, enabling reinvestment and cushioning downturns in demand.
Material leverage improvement to investment grade
Reaching an investment-grade net leverage metric is a structural reduction in financial risk. It lowers refinancing costs and expands access to capital markets, giving management durable flexibility to fund fleet upgrades, reinstate dividends and prioritize debt paydown over the next several quarters.
Negative Factors
Still-elevated absolute debt load
A high absolute debt burden leaves the company exposed to cyclical demand shocks and interest-rate risk. Even with improvement, elevated leverage constrains capital allocation and raises refinancing and covenant risks, a structural overhang that matters across a 2–6 month horizon.
Weak free cash flow conversion to net income
Low FCF-to-income conversion means earnings growth is not fully translating into cash that can pay down debt or fund returns. This structural gap limits durable improvements in leverage and reduces the margin for error if costs or demand deteriorate in the coming quarters.
Rising competitive capacity in Caribbean
A structural increase in competitor capacity in the Caribbean pressures yields and occupancy, forcing Carnival to defend market share via pricing or marketing spend. That dynamic can compress margins and returns over 2–6 months, especially given the company's cyclical demand exposure.
Carnival (CUK) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$44.68B
Dividend YieldN/A
Average Volume (3M)2.52M
Price to Earnings (P/E)15.7
Beta (1Y)1.65
Revenue Growth6.39%
EPS Growth39.66%
CountryUS
Employees115,000
SectorConsumer Cyclical
Sector Strength84
IndustryLeisure
Share Statistics
EPS (TTM)0.34
Shares Outstanding188,486,680
10 Day Avg. Volume2,541,369
30 Day Avg. Volume2,523,743
Financial Highlights & Ratios
PEG Ratio0.31
Price to Book (P/B)2.77
Price to Sales (P/S)1.28
P/FCF Ratio13.05
Enterprise Value/Market Cap1.57
Enterprise Value/Revenue2.64
Enterprise Value/Gross Profit7.07
Enterprise Value/Ebitda10.21
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)2.56
Revenue Forecast (FY)$27.86B
Carnival Business Overview & Revenue Model
Company DescriptionCarnival Corporation & plc operates as a leisure travel company. Its ships visit approximately 700 ports under the Carnival Cruise Line, Princess Cruises, Holland America Line, P&O Cruises (Australia), Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises (UK), and Cunard brand names. The company also provides port destinations and other services, as well as owns and owns and operates hotels, lodges, glass-domed railcars, and motor coaches. It sells its cruises primarily through travel agents, tour operators, vacation planners, and websites. The company operates in the United States, Canada, Continental Europe, the United Kingdom, Australia, New Zealand, Asia, and internationally. It operates 87 ships with 223,000 lower berths. Carnival Corporation & plc was founded in 1972 and is headquartered in Miami, Florida.
How the Company Makes MoneyCarnival generates revenue primarily through the sale of cruise tickets and onboard services. Ticket sales represent a significant portion of its income, with customers purchasing cruise packages that include accommodations, meals, and entertainment. Additionally, Carnival earns substantial revenue from onboard spending, which encompasses purchases made by guests during their cruise, including dining at specialty restaurants, spa services, excursions, and shopping. The company also has partnerships with various travel agencies and online travel platforms that help in marketing and distributing its cruise offerings. Furthermore, Carnival benefits from brand loyalty programs and promotional campaigns that encourage repeat business, contributing to its long-term revenue growth.
Carnival Earnings Call Summary
Earnings Call Date:Dec 19, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Mar 20, 2026
Earnings Call Sentiment Positive
The earnings call highlighted a record-breaking financial performance for 2025 with strong cost management and booking volumes, leading to a positive outlook for 2026. However, challenges such as increased capacity in the Caribbean and low consumer sentiment present potential risks. The reinstatement of dividends and achievement of an investment-grade leverage ratio demonstrate financial strength, outweighing the lowlights.Q4-2025 Updates
Positive Updates
Record-Breaking Financial Performance
The company delivered historical highs for revenues, yields, operating income, and EBITDA for both the fourth quarter and the full year 2025, with net income exceeding $3 billion, a 60% increase over 2024.
Successful Cost Management
Unit costs improved over 1 point better than initial guidance with a 2.6% increase for the year, effectively mitigating inflation and higher expenses.
Strong Booking Volumes
Achieved record booking volumes for 2026 and 2027, with customer deposits up 7% year-over-year, hitting an all-time high.
Reinstatement of Dividend
Resumed dividend at an initial rate of $0.15 per quarter, reflecting confidence in cash generation and balance sheet improvements.
Investment-Grade Leverage
Achieved an investment-grade net debt to adjusted EBITDA ratio of 3.4x at year-end 2025, with significant debt reduction achieved over the past three years.
Negative Updates
Challenges in the Caribbean Market
Significant increase in non-Carnival Corporation capacity growth in the Caribbean, posing potential challenges for 2026.
Consumer Sentiment Concerns
Despite strong performance, there were mentions of U.S. consumer sentiment reaching low levels, which could impact future booking behaviors.
Regulatory and Tax Increases
Regulatory costs related to emission allowances and higher income taxes are expected to cost $0.11 per share in 2026.
Company Guidance
During the Carnival Corporation & plc Fourth Quarter 2025 Earnings Call, the company provided detailed guidance and key performance metrics that highlighted its robust financial health and strategic direction. Carnival reported a net income of over $3 billion for the year, marking a 60% increase over 2024 and exceeding initial guidance by more than 30%. Full-year yields improved by over 5.5%, surpassing initial projections by 1.5 percentage points. The company also achieved a 2.6% increase in unit costs, which was better than initial guidance by over one percentage point. Operating margins and EBITDA margins rose by more than 250 basis points year-over-year, leading to the highest operating income per Available Lower Berth Day (ALBD) in nearly two decades. The company guided a 3% yield increase for 2026, incorporating a 4% capacity growth and a 14% increase in non-Carnival Corporation capacity in the Caribbean. Carnival also reported a 3.25% expected growth in unit costs for 2026, with net cruise cost ex-fuel per ALBD projected to rise by about 2.5%. Additionally, the company announced the resumption of its dividend at $0.15 per quarter, reflecting confidence in sustained cash generation and a strengthened balance sheet. These metrics underscore the company's strong operational performance and strategic initiatives aimed at maintaining growth and shareholder value.Carnival Financial Statement Overview
Summary
Strong profitability recovery (2025 ~10.4% net margin) and solid operating performance with positive free cash flow ($2.6B). The key offset is a still debt-heavy balance sheet (debt ~$28B; elevated leverage), plus weaker cash conversion in 2025 (FCF down vs. 2024 and below net income).Income Statement
Profitability has inflected sharply positive versus prior loss years, with 2025 delivering ~10.4% net margin and solid operating profitability (EBIT margin ~15.5%, EBITDA margin ~26.0%). Revenue has continued to scale (2025 up vs. 2024), indicating demand and pricing momentum. The main drawback is some pressure in gross margin (down materially in 2025 vs. 2024), suggesting higher input/operating costs even as below-the-line profitability improved.78
Positive
Balance Sheet
Leverage remains the key overhang: total debt is still very large ($28.0B in 2025) and debt-to-equity is elevated (~2.28x), even though it has improved meaningfully from 2022–2024 peak levels. Equity has rebuilt (up to $12.3B in 2025), and return on equity is strong (~22.5%), reflecting the earnings recovery. Overall, the balance sheet is improving, but still relatively debt-heavy for cyclical leisure demand.54
Neutral
Cash Flow
Cash generation is healthy with 2025 operating cash flow of $6.2B and positive free cash flow of $2.6B, a major turnaround from 2020–2022. However, free cash flow declined in 2025 versus 2024, and free cash flow covered less than half of net income (roughly 0.42x), indicating earnings are not translating one-for-one into excess cash after investment needs. Still, the company is now consistently producing positive cash flow, which supports continued deleveraging potential.66
Positive
| Breakdown | Nov 2025 | Nov 2024 | Nov 2023 | Nov 2022 | Nov 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 26.62B | 25.02B | 21.59B | 12.17B | 1.91B |
| Gross Profit | 7.88B | 9.38B | 7.28B | 412.00M | -2.75B |
| EBITDA | 6.91B | 6.23B | 4.37B | -2.20B | -5.69B |
| Net Income | 2.76B | 1.92B | -74.00M | -6.09B | -9.50B |
Balance Sheet | |||||
| Total Assets | 51.69B | 49.06B | 49.12B | 51.70B | 53.34B |
| Cash, Cash Equivalents and Short-Term Investments | 1.93B | 1.21B | 2.42B | 4.03B | 9.14B |
| Total Debt | 27.99B | 28.88B | 31.89B | 35.88B | 34.61B |
| Total Liabilities | 39.40B | 39.81B | 42.24B | 44.64B | 41.20B |
| Stockholders Equity | 12.28B | 9.25B | 6.88B | 7.06B | 12.14B |
Cash Flow | |||||
| Free Cash Flow | 2.61B | 1.30B | 997.00M | -6.61B | -7.72B |
| Operating Cash Flow | 6.22B | 5.92B | 4.28B | -1.67B | -4.11B |
| Investing Cash Flow | -3.32B | -4.54B | -2.81B | -4.77B | -3.54B |
| Financing Cash Flow | -2.19B | -2.58B | -5.09B | 3.58B | 6.95B |
Carnival Technical Analysis
Positive
23.47
Price Trends
29.87
Positive
27.40
Positive
26.22
Positive
Market Momentum
0.75
Positive
54.65
Neutral
29.78
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CUK, the sentiment is Positive. The current price of 23.47 is below the 20-day moving average (MA) of 31.18, below the 50-day MA of 29.87, and below the 200-day MA of 26.22, indicating a bullish trend. The MACD of 0.75 indicates Positive momentum. The RSI at 54.65 is Neutral, neither overbought nor oversold. The STOCH value of 29.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CUK.
Carnival Risk Analysis
Carnival disclosed 19 risk factors in its most recent earnings report. Carnival reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Carnival Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $44.68B | 15.68 | 25.64% | ― | 6.39% | 39.66% | |
71 Outperform | $6.44B | 22.50 | 10.38% | ― | 15.77% | 86.16% | |
70 Outperform | $45.02B | 15.75 | 25.64% | ― | 6.39% | 39.66% | |
70 Outperform | $2.27B | 32.22 | 13.53% | 0.79% | 7.27% | 45.12% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
58 Neutral | $7.82B | 37.25 | ― | ― | 14.39% | 31.64% | |
52 Neutral | $411.51M | -5.06 | ― | ― | -3.55% | -111.90% |
* Consumer Cyclical Sector Average
CUK
Carnival
31.83
10.50
49.23%
CCL
Carnival
31.99
8.47
36.01%
PLNT
Planet Fitness
90.65
-8.59
-8.66%
OSW
OneSpaWorld Holdings
22.48
3.82
20.47%
XPOF
Xponential Fitness
8.29
-6.00
-41.99%
LTH
Life Time Group Holdings
28.95
-2.05
-6.61%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.