# Carnival (CCL)

Sector: Cruise lines

| Field | Value |
|---|---|
| Price | $25.90 |
| Fair value (Analysts) | $35.00 |
| Discount to fair value | 26% |
| Fair value uncertainty (Analysts) | High |
| Economic moat (Analysts) | Narrow |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 1.93 |
| Data as of | 2026-10-16 |
| Next earnings | 2026-12-29 (estimate) |

## In short

The market prices Carnival for high debt and the risk of weaker travel demand, and steady yield growth with falling leverage over the next four to six quarters can close the gap.

## Themes and gap

- Themes: High debt (leverage), Weak consumer (weak-consumer), Power and energy (power-energy)
- Gap type: Can close (closable)
- Why: The 2027 guidance in December 2026 and the quarterly leverage figures show whether yield growth and debt reduction continue.

## About

Carnival is the largest cruise company in the world. Its cruise lines are AIDA Cruises, Carnival Cruise Line, Costa Cruises, Cunard, Holland America Line, P&O Cruises, Princess Cruises and Seabourn. It reports North America and Europe cruise segments. It also has its own destinations in the Caribbean, such as Celebration Key on Grand Bahama, which welcomed almost 2.5 million guests in its first year. Revenue was $21.3 billion in the nine months to August 31, 2026. On May 7, 2026, Carnival ended its dual listed company structure: Carnival plc became a subsidiary, and the company moved from Panama to Bermuda as Carnival Corporation Ltd. Its fiscal year ends on November 30.

## Thesis

The market prices Carnival for high debt and for the risk that cruise demand falls in a weaker economy. Total debt was $24.6 billion at August 31, 2026, much of it from borrowing during the pandemic. Fuel prices rose nearly 30% in Q2 2026 during the conflict in the Middle East, and the conflict also slowed bookings for European cruises. Carnival still reported record net yields and record Q3 customer deposits of $7.6 billion, and two rating agencies now rate it investment grade. For the gap to close, three things must be true. Net yields must keep growing in 2027, as the record booked position for 2027 suggests. Net debt to adjusted EBITDA must keep falling toward the PROPEL target of 2.75 times. Carnival must stay on track for the PROPEL targets for 2029: return on invested capital above 16% and adjusted EPS more than 50% higher than in 2025. The Q4 2026 report and the 2027 guidance, estimated for about December 29, 2026, are the next test. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a recession or a new shock to travel, which can lower demand and prices quickly.

## Checkpoints

- Dec 29, 2026 (estimate): Q4 2026 earnings and 2027 guidance. Status: Pending. Watch: 2027 guidance for higher net yields and lower leverage pass; guidance for lower yields or a large rise in costs fail.
- 2029: PROPEL targets. Status: Pending. Watch: Return on invested capital above 16%, adjusted EPS more than 50% above 2025 and net debt to adjusted EBITDA near 2.75 times pass; a miss on these targets fails.

## Balance sheet

- Cash: $1.2B
- Debt: $24.6B
- Net debt: $23.3B
- EBITDA, last 12 months: $7.3B
- Net debt / EBITDA: 3.2× (medium)
- Interest cover: 4.3×
- Undrawn credit line: $4.5B, to June 2030
- Debt due within 12 months: $2.0B
- Last debt due: 2037

Carnival funds its ships with unsecured notes, bank loans and export credit facilities. In Q3 2026, S&P became the second agency to rate Carnival investment grade, and Carnival has no secured debt left. Total debt principal was $24.56 billion at August 31, 2026, down from $27.38 billion at November 30, 2025. Cash was $1.22 billion, and $4.5 billion was available under the revolving facility through June 2030. Carnival also had $10.7 billion of undrawn export credit facilities for ship deliveries through 2033. EBITDA is adjusted EBITDA for the 12 months to August 31, 2026: Q4 2025 plus the first nine months of 2026. Interest cover is operating income divided by interest expense, net of capitalized interest, for the first nine months of 2026. The PROPEL plan targets net debt to adjusted EBITDA of 2.75 times. Carnival also paid $618 million of dividends and $929 million for share repurchases in the first nine months of 2026.

As of 2026-08-31.

Sources:

- https://www.sec.gov/Archives/edgar/data/815097/000081509726000107/ccl-20260831.htm
- https://www.sec.gov/Archives/edgar/data/815097/000081509726000104/a20263qearningsrelease8-k.htm
- https://www.sec.gov/Archives/edgar/data/815097/000162828025058106/a20254qearningsrelease8-k.htm

## Recent events

- 2026-09-29: Carnival reported Q3 2026 results. Net income was a record $1.9 billion, and adjusted EPS was $1.43, the same as a year earlier despite a $0.10 cost from fuel prices and currency. Net yields rose 2.4% in constant currency, and customer deposits reached a Q3 record of $7.6 billion. Carnival expects 2026 adjusted EPS of about $2.24 and has bought back about $1.2 billion of shares this year.
- 2026-08-05: Carnival gave notice that it will redeem all $500 million of its 7.000% notes due 2029 on August 15, 2026, at 103.50% of face value. The collateral for these notes fell away on June 25, 2026, after Carnival received a second investment grade credit rating.
- 2026-06-23: Carnival reported Q2 2026 results. Adjusted net income was a record $569 million, up more than 20%, although fuel prices rose nearly 30%. Bookings for European cruises slowed because of the conflict in the Middle East. Customer deposits reached an all-time high of $9.0 billion, and the company was 93% booked for the year.
- 2026-05-07: Carnival completed the unification of its dual listed company structure. Carnival plc shareholders received one share of Carnival Corporation Ltd. for each share, Carnival plc left the London Stock Exchange, and the company moved its incorporation from Panama to Bermuda.
- 2026-03-27: Carnival announced PROPEL, its targets for 2029: return on invested capital above 16%, adjusted EPS growth of more than 50% from 2025, more than 40% of operating cash flow paid to shareholders, and net debt to adjusted EBITDA of 2.75 times. The boards approved an initial $2.5 billion share buyback program.

## Risks

- High: Cruise demand depends on the economy, travel safety and world events. The conflict in the Middle East slowed bookings for European cruises in 2026. A recession or a new shock can lower occupancy and prices quickly.
- High: Total debt was $24.6 billion at August 31, 2026. Debt of $2.52 billion is due in 2027 and $3.96 billion in 2028. Higher interest rates or weaker results can make refinancing more costly.
- Medium: Fuel is a large cost. Fuel prices rose nearly 30% in Q2 2026, and a 10% change in fuel cost per metric ton changes Q4 2026 adjusted net income by about $59 million.
- Medium: Carnival has new ship commitments of $1.6 billion in 2027 and $1.5 billion in 2028, and $11.4 billion after 2030. These commitments limit how fast it can lower debt if demand weakens.

## Links

- Page: https://picks.kamadorueda.com/company/CCL/
- History of changes: https://picks.kamadorueda.com/company/CCL/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/CCL.json

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