Core Insights - Carnival Corporation & plc (CCL) has reported a significant rebound in profitability, achieving its highest second-quarter EBITDA margins in nearly 20 years, with adjusted EBITDA reaching $1.51 billion, an increase from $1.2 billion in the same quarter last year [1][9] - The company attributes its margin improvement to strong pricing and operational leverage, with yields increasing by nearly 6.5% year over year, surpassing guidance by 200 basis points [2][9] - Carnival has exceeded two of its three 2026 SEA Change targets ahead of schedule, with EBITDA per available lower berth day rising 52% from 2023 levels and return on invested capital increasing by 12.5% [3] Financial Performance - The net debt-to-EBITDA ratio improved from 4.1 to 3.7 in the fiscal second quarter, alongside a decline in interest expenses, indicating a positive trend in bottom-line metrics [4] - Carnival has raised its full-year 2025 adjusted EBITDA outlook to approximately $6.9 billion, reflecting a 10% increase from 2024 levels and exceeding previous guidance of $6.7 billion [5][9] Competitive Landscape - Royal Caribbean Cruises Ltd. (RCL) reported EBITDA margins of 35% in the first quarter, a 360 basis point improvement year over year, driven by strong bookings and favorable pricing [6] - Norwegian Cruise Line Holdings Ltd. (NCLH) posted adjusted EBITDA of $453 million in the first quarter of 2025, with a trailing 12-month EBITDA margin of 35.5%, up 280 basis points from the prior year, supported by a company-wide efficiency program [7] Market Performance - CCL shares have increased by 40.5% over the past three months, outperforming the industry growth of 16.8% [8] - CCL trades at a forward price-to-earnings ratio of 13.29X, significantly below the industry average of 18.98X [10] Earnings Estimates - The Zacks Consensus Estimate for CCL's fiscal 2025 and 2026 earnings indicates a year-over-year increase of 38% and 13.4%, respectively, with EPS estimates having risen in the past 30 days [11]

Group 1 - Lincoln Educational Services Corporation (LINC) is part of the Consumer Discretionary group, which consists of 256 companies and currently ranks 10 in the Zacks Sector Rank [2] - LINC has a Zacks Rank of 2 (Buy), indicating a positive outlook, with the consensus estimate for its full-year earnings increasing by 5.9% over the past quarter [3] - Year-to-date, LINC has achieved a return of approximately 45.7%, significantly outperforming the average gain of 11.7% for the Consumer Discretionary sector [4] Group 2 - LINC belongs to the Schools industry, which includes 18 stocks and is currently ranked 11 in the Zacks Industry Rank, with an average gain of 9.2% this year [5] - In comparison, another stock in the Consumer Discretionary sector, Carnival (CCL), has a year-to-date return of 12.8% and is part of the Leisure and Recreation Services industry, which is ranked 79 and has gained 4.4% year to date [4][6]

Core Insights - In times of market volatility, investors often prefer value investing, seizing opportunities to buy undervalued stocks as others sell at lower prices [1][2] Value Investment Strategy - Value investing can lead to "value traps" where stocks underperform due to persistent issues rather than temporary problems [3] - Key metrics for identifying value stocks include dividend yield, P/E ratio, and P/B ratio [3] Importance of PEG Ratio - The PEG ratio, defined as (Price/Earnings)/Earnings Growth Rate, is a crucial metric for assessing a stock's intrinsic value [4][5] - A low PEG ratio is favorable for value investors, but it has limitations, such as not accounting for changing growth rates [5] Screening Criteria for Value Stocks - Effective screening criteria for value stocks include a PEG ratio less than the industry median, a P/E ratio below the industry median, Zacks Rank 1 or 2, market capitalization over $1 billion, average 20-day volume greater than 50,000, and upward earnings estimate revisions greater than 5% [6] Selected Stocks - Carnival Corporation (CCL) has a five-year growth rate of 28.5% and a Zacks Rank 2 with a Value Score of A [7][9] - Harmony Gold Mining (HMY) shows a long-term historical growth rate of 73.4%, a Zacks Rank 1, and a Value Score of B [7][10][11] - Dollar Tree (DLTR) has a five-year expected growth rate of 6.7% and a Zacks Rank 2 with a Value Score of B [7][12][13] - Greif, Inc. (GEF) has a long-term expected earnings growth rate of 9.9%, a Value Score of A, and a Zacks Rank of 1 [7][14]

Market Overview - Wall Street is experiencing a rally, with the S&P 500 and Nasdaq reaching new all-time highs due to eased trade worries and geopolitical tensions [1][6] - The S&P 500 has gained nearly 20% from its April lows and is up 5% year to date, closing at 6,204.95 points [6] - The Nasdaq closed at 20,369.73, also marking a new all-time high [6] Consumer Sentiment - Consumer sentiment has rebounded for the first time in six months, with the Michigan Consumer Sentiment Index rising 16.3% to 60.7 in June from May's 52.2, marking the largest monthly increase in over 30 years [3][9] - This increase in consumer sentiment is attributed to positive developments, including a potential trade deal with China and easing geopolitical tensions in the Middle East [4][5] Federal Reserve Expectations - Market participants are anticipating at least two 25 basis point rate cuts from the Federal Reserve this year, with expectations for the first cut as early as July [7] Consumer Discretionary Stocks - Consumer discretionary stocks such as Interface, Inc. (TILE), Carnival Corporation & plc (CCL), Grand Canyon Education, Inc. (LOPE), and fuboTV Inc. (FUBO) are identified as having strong potential in 2025, each holding a Zacks Rank 2 (Buy) [2][9] - Interface, Inc. has an expected earnings growth rate of 8.2% for the current year, with a 2.6% improvement in earnings estimates over the past 60 days [8] - Carnival Corporation & plc is projected to have a 38% earnings growth rate for the current year, with a 5.8% improvement in earnings estimates over the last 60 days [10] - Grand Canyon Education, Inc. has an expected earnings growth rate of 8.8%, with a 1.3% improvement in earnings estimates over the past 60 days [12] - fuboTV Inc. is expected to see a 69% earnings growth rate for next year, with a 25% improvement in current-year earnings estimates over the past 60 days [13]

Core Insights - Carnival's shares have risen approximately 11% in the past month and nearly 40% over the last 12 months, driven by strong second-quarter results that exceeded expectations [2][3] - The company reported revenue of approximately $6.33 billion, a 9% increase year-over-year, and net income of $565 million, up from $92 million a year ago [2] - Carnival has raised its full-year forecast, projecting adjusted net income to be 40% greater compared to 2024, indicating strong demand for leisure cruising post-Covid-19 [2] Financial Performance - Carnival's revenues have shown significant growth, with a 12.7% increase from $23 billion to $25 billion in the last 12 months, compared to a 5.5% growth for the S&P 500 [6] - The company's quarterly revenues increased by 7.5% to $5.8 billion in the latest quarter from $5.4 billion the previous year, while the S&P 500 saw a 4.8% improvement [7] - Carnival's operating income over the past four quarters was $3.8 billion, reflecting a moderate operating margin of 15.1% [7] Valuation Metrics - Carnival's price-to-sales (P/S) ratio is 1.3 compared to 3.1 for the S&P 500, indicating it may be slightly undervalued [4][6] - The price-to-earnings (P/E) ratio for Carnival stands at 16.4, while the S&P 500's P/E is 26.9, suggesting a more attractive valuation [6] Financial Stability - Carnival's debt was $28 billion at the end of the most recent quarter, with a market capitalization of $34 billion, resulting in a debt-to-equity ratio of 84.4% [8] - The company's cash (including cash equivalents) is $833 million out of total assets of $49 billion, leading to a cash-to-assets ratio of 1.7% [8] Resilience in Downturns - CCL stock has historically performed worse than the S&P 500 during downturns, with significant declines during the Covid pandemic and the inflation shock [9][10][11] - The stock has not yet recovered to its pre-crisis peak values, indicating potential vulnerabilities in economic downturns [10][11]

Core Viewpoint - Carnival is experiencing strong demand and financial recovery, making its stock an attractive investment opportunity despite high debt levels [1][10]. Group 1: Demand and Revenue Growth - Carnival is the largest cruise operator globally, with record demand for its cruises, surpassing pre-pandemic sales levels [2][4]. - In Q2 of fiscal 2025, revenue increased by 8.6% year over year, with total deposits reaching a record $8.5 billion [2][4]. - Operating income nearly doubled year over year to almost $1 billion, and adjusted net income more than tripled, with EPS of $0.35 exceeding expectations [5]. Group 2: Future Investments - Carnival is investing in new ships and upgrades to maintain strong demand, with one new ship scheduled for delivery this year and four more on order for 2027 to 2032 [6][7]. - The company is launching a new resort, Celebration Key, in the Bahamas, which can accommodate two million guests annually, enhancing its offerings [8]. - Additional experiences, RelaxAway and Isla Tropicale, are set to launch next year, along with a new membership program to drive repeat business [9]. Group 3: Debt Management and Financial Stability - Carnival's total debt stands at over $27 billion, down nearly $10 billion from its peak of $32 billion at the end of 2022, with efficient debt repayment strategies [10]. - The company received upgrades from Fitch and S&P Global, now just one notch away from an investment-grade rating, indicating improved financial health [11]. - Carnival's stock trades at a forward P/E ratio of 12 and a P/S ratio of just over 1, suggesting it is undervalued [11].

Group 1: Carnival - Carnival is experiencing strong demand and financial performance, with fiscal Q2 revenue reaching $6.3 billion, leading to a trailing-12-month revenue of $25.4 billion, surpassing pre-pandemic levels of $20.8 billion in fiscal 2019 [3][5] - The stock price has more than doubled in the past three years, and the current forward price-to-earnings multiple is 12.5, indicating potential for further shareholder returns through improved margins [4] - Adjusted net income for Carnival exceeded guidance at $470 million, with expectations to reach $2.7 billion for the full year, up from $1.9 billion last year [5] - The launch of Celebration Key as a new cruise destination is expected to drive profitable growth, with attractions designed to enhance guest experience and increase ticket prices and margins [6][7] - Wall Street is underestimating Carnival's transformation into a brand that offers exclusive destinations, which could lead to attractive returns for shareholders [8] Group 2: Nintendo - Nintendo's stock has seen significant appreciation, with a 338% increase since late 2016, outperforming the S&P 500's 172% return [9] - The video game industry is valued at $180 billion, with Nintendo owning valuable intellectual properties like Mario Bros and Zelda, and the Switch console achieving record sales of 152 million units [10] - The recent launch of Switch 2 has been successful, selling over 3.5 million units in the first four days, indicating strong market demand [10] - While hardware sales are low-margin, Nintendo expects to sell more games for Switch 2 than the original Switch sold in its first 10 months, setting the stage for strong earnings growth [11] - Analysts have a price target of $34.90 for Nintendo, suggesting a 52% upside from the current share price of $23, with sales expected to double this year [13]

Core Insights - Consumer demand for experiential travel is rebounding, benefiting cruise operators like Carnival Corporation & plc (CCL) and Royal Caribbean Cruises Ltd. (RCL) [1] - Both companies are leveraging strong brand portfolios and improving fundamentals to capitalize on elevated demand and pricing power [1] Carnival Corporation (CCL) - Carnival is achieving robust yield growth and operational momentum, exceeding its 2026 targets for EBITDA per berth growth and return on invested capital 18 months ahead of schedule [3] - The company is set to launch Celebration Key, a flagship private Caribbean destination, and is enhancing its "Paradise Collection" strategy with upgrades to existing destinations [4] - Carnival is revamping its fleet and launching a new loyalty program, Carnival Rewards, expected to boost guest engagement [5] - Financially, Carnival has refinanced $7 billion of debt and improved its net debt-to-EBITDA ratio from 4.1x to 3.7x in Q2 2025, focusing on regaining investment-grade status [6] Royal Caribbean Cruises Ltd. (RCL) - Royal Caribbean is executing its "Perfecta Performance" strategy, reporting yield growth of 5.6% and a 35% EBITDA margin in Q1 2025, driven by strong demand and pricing power [7] - The company is expanding its exclusive destination portfolio with the Royal Beach Club in Nassau, aimed at enhancing guest engagement and boosting ancillary revenues [8] - RCL's digital initiatives, including a widely adopted mobile app, are improving direct bookings and revenue capture [9] - However, RCL faces near-term cost pressures related to ship deployment and elevated expenses tied to destination rollouts and dry dock activities [10] Financial Performance and Valuation - The Zacks Consensus Estimate for Carnival's fiscal 2025 sales and EPS suggests increases of 5.4% and 38%, respectively, with earnings estimates rising 3.8% in the past 60 days [11] - For Royal Caribbean, the estimates indicate year-over-year increases of 9.4% in sales and 30.7% in EPS, with a 6% rise in earnings estimates over the same period [13] - Carnival stock has increased by 31.7% over the past three months, while Royal Caribbean shares have risen by 42.6% [15] - Carnival's forward P/E ratio is 12.92X, below the industry average of 18.59X, while RCL's is 17.92X [18] Investment Outlook - Carnival presents a more attractive near-term buying opportunity due to operational efficiency and financial gains, while RCL may require a wait-and-see approach due to cost pressures [27][28]

Core Insights - Carnival's international operations are crucial for assessing its financial strength and growth potential [1][2] - The company's total revenue for the quarter was $6.33 billion, a 9.5% increase year-over-year [4] International Revenue Trends - Australia contributed $315 million, or 4.98% of total revenue, which was an 11.19% miss against expectations of $354.7 million [5] - Other International markets generated $275 million, accounting for 4.35% of total revenue, exceeding the estimate of $212.65 million by 29.32% [6] - Europe represented 31.04% of total revenue, translating to $1.96 billion, surpassing expectations by 4.11% [7] Revenue Forecasts - For the current fiscal quarter, total revenue is projected at $8 billion, a 1.3% increase year-over-year, with contributions expected from Australia (6.3%), Other International (3.6%), and Europe (30%) [8] - For the full year, total revenue is anticipated to reach $26.37 billion, reflecting a 5.4% increase, with regional contributions from Australia (6.4%), Other International (4%), and Europe (29.3%) [9] Market Performance - Carnival's stock has increased by 13% over the past month, outperforming the S&P 500's 6% increase [13] - Over the past three months, the company's shares rose by 51.5%, compared to a 7.9% increase in the S&P 500 [13]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-9610 Commission file number: 001-15136 Carnival Corporation Carnival plc (Exact name of registrant as specified in its charter) ( ...