Is Carnival Corp A Buy?

🌟🌟🌟Carnival Corp $Carnival(CCL)$  is the world's largest cruise ship company by passengers carried.  In addition to the Carnival brand, it owns Holland America, Princess Cruises, Aida Cruises, Costa Cruises, Cunard, P&O and Seabourn.  Carnival's share price has been on a tear with its share price up 17.8% in just 1 month, hitting a 52 week high of USD 25.45 in November and rising by 45% year todate.  In 2023, Carnival is up 72%.

Is Carnival A Buy?

Let's check out its latest Q3 24 Earnings report which was released on September 30.

For the quarter Net Income was USD 1.7 billion, an increase of over 60% compared to 2023.  Adjusted Net Income outperformed June guidance by USD 170 million.

Q3 24 revenue hit an all time high of USD 7.9 billion, up USD 1.0 billion compared to previous year quarter.

Record operating income of USD 2.2 billion exceeded 2023 levels by USD 554 million.

As a result of strong demand and cost saving measures, Carnival has raised its full year 2024 adjusted EBITDA guidance to approximately USD 6 billion, up over 40% compared to 2023 and better than June guidance by nearly USD 200 million.

The cumulative advanced sailing bookings position for full year 2025 is above the previous 2024 record with prices ahead of prior year. 

Carnival CEO Josh Weinstein said that Carnival delivered a phenomenal 3rd quarter, breaking operational records and outperforming across the board.  Carnival's strong performance was led by high margin same ship yield growth, driving a 26% improvement in unit operating income.  This is the highest level that Carnival has reached in 15 years.

Carnival is poised to deliver record operating performance for full year 2024 and adjusted return on invested capital will be 10.5%.  This is the 3rd time that Carnival has increased its full year guidance.  Carnival has also improved its cost guidance driving more revenue for its bottom line.

With nearly half of 2025 sailings booked and less inventory remaining for sale than previous year, Carnival is leveraging strong demand to achieve record ticket pricing.  Carnival's brands continue to deliver robust bookings momentum ahead on price for 2025 sailings.  This was based on the success of demand generation efforts along with exciting offerings and unparalleled experiences that Carnival consistently provide its customers.  2026 is off to an unprecedented start, achieving record booking volumes in the last 3 months.

Carnival continues to improve its leverage metrics and balance sheet with strong cash generation and continued debt reduction.  In fact Carnival's efforts to reduce their debt have been recognised by both S&P and Moody's with recent credit rating upgrades.  In 2024, Carnival's adjusted free cash flow is expected to be over USD 3 billion. 

What an excellent Q3 24 Earnings report for Carnival!  It is not surprising that its share price has been hitting 52 week highs recently. It also makes me happy that my faith and confidence in Carnival is justified. 

Compared to its biggest competitor $Royal Caribbean Cruises(RCL)$  Carnival seems undervalued and has a lot more upside potential. 

As I am an avid cruiser, I have experienced first hand Carnival 's excellent service and value for money cruises when I sailed on Princess Cruises.  Cruising provides a stress free vacation with almost all meals, transportation as well as activities and entertainment all included.

Wall Street Analysts are bullish on Carnival with a Strong  Buy rating. 

It's Full Steam Ahead for Carnival as it sails into an exciting future with lots of exponential growth ahead.   Let's catch the boat before it sails away. 

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