In the early days of the pandemic, it seemed Covid-19 might put an end to cruising, given ships' reputation -- not entirely unfairly -- for being floating petri dishes.
Yet demand rebounded quickly, given that cruises have been cheaper than land-based vacations in recent years, allow for multigenerational travel (increasingly important when grandparents are footing the bill), and feature exclusive experiences and private islands.
Demand has largely held up, but investors can't count on the rising tide lifting all boats' stocks.
The still unresolved Iran War is one issue. Oil prices have come down from their conflict peak, but remain high, and aren't likely to revert to prewar levels. That means headline risks for the shares -- cruise companies were lower across the board on Wednesday, after President Donald Trump said the latest cease-fire was over, following strikes on both sides.
While companies can pass on increased fuel costs to consumers, they do risk creating some demand destruction, especially for lower income passengers. And the longer energy prices stay high, the less disposable income many would-be customers have to spend on vacations in general.
The upshot is that investors need to be picky. BMO Capital Markets analyst Tristan Thomas-Martin initiated coverage on the four major cruise companies on Tuesday, rating Royal Caribbean and Viking Holdings at Outperform, with price targets of $370 and $115, respectively. He has Market Perform ratings on Carnival Corp, which he thinks should trade to $30, and Norwegian Cruise Line Holdings, with a $21 target.
Viking has more than doubled since Barron's recommended it just over a year ago, citing its loyal and wealthy clientele and dominance in the attractive river cruise market. Thomas-Martin agrees, writing "valuation is pricey, but we think you get what you pay for." That's reflected in its top-tier metrics, with return on invested capital of 53% at the end of 2025, exceeding all its publicly traded rivals, and expected earrings per share growth of roughly 27% this year and 31% next year -- again well ahead of the pack.
Royal Caribbean isn't far behind, with expected earnings growth of roughly 10% this year and 15% next year. It's risen some 240% in the past five years, whereas Carnival is up just 5% and Norwegian is in the red over that period. (Viking's initial public offering was in spring 2024).
"Royal Caribbean is our top pick in the Cruise sector, having optimized cruise -- both keeping cruisers in its ecosystem and attracting new cruisers, and thinking about the next leg of the industry's growth via an expanding portfolio of shore offerings and entrance into the river segment," says Thomas-Martin.
Carnival's earnings, meanwhile, are near break-even for the year, with Norwegian's EPS declining from the year-ago period. Both are expected to return to double-digit growth next year, and it's worth noting that Carnival has meaningfully reduced its debt load.
However, Thomas-Martin says he "struggle[s] to find a near-term catalyst for Carnival beyond industry tailwinds," especially as management has adopted a more cautious tone about the rest of the year.
Norwegian, "raises the most questions in the cruise space, considering results are lagging peers, activist involvement, and a tough backdrop against well-oiled competitors," he writes.
Cruising is still going strong. Not every company can win the regatta.
Write to Teresa Rivas at teresa.rivas@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 08, 2026 15:52 ET (19:52 GMT)
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