Is Carnival the Best Cruise Stock to Buy Right Now?

Core Viewpoint - Carnival Corporation is experiencing strong demand for cruise vacations, allowing it to avoid heavy discounting and improve revenue and profit margins despite concerns about its debt load [1][2]. Company Performance - Carnival's Q3 sales are expected to reach a record $8.07 billion, reflecting a 2% increase, while earnings per share (EPS) are projected to rise 4% to $1.32 [3]. - The company has exceeded EPS expectations for 11 consecutive quarters, with an average earnings surprise of 169.85% in the last four quarters [3][4]. - Carnival's total sales are projected to grow by 6% in fiscal 2025, with FY26 sales expected to reach $27.56 billion, although this growth lags behind competitors like Royal Caribbean and Norwegian Cruise Line [5][6]. Earnings Growth - Carnival is anticipated to have a 42% EPS growth rate this year, leading its peers, with annual earnings expected to rise to $2.02 per share compared to $1.42 in FY24 [6]. - The projected FY26 EPS growth rate of 14.85% is expected to trail competitors but still surpass the S&P 500 benchmark [7]. Stock Performance - Year-to-date, Carnival's stock has gained over 20%, outperforming broader indexes, while Royal Caribbean has seen a 40% increase [8]. - Over the last three years, Carnival and Royal Caribbean stocks have posted significant gains of over 230% and 600%, respectively [8]. Valuation Comparison - Carnival shares are currently trading at $30 with a forward earnings ratio of 15.1X, which is a discount compared to Royal Caribbean's 21X [10][11]. - Both Carnival and Norwegian stocks are trading below the optimal level of less than 2X forward sales, while Royal Caribbean trades at 5.1X [11]. Investment Outlook - Carnival is positioned as a strong investment opportunity in the cruise sector, holding a Zacks Rank 2 (Buy), while Norwegian also shares this favorable ranking [12].