What's Wrong With Carnival Corp Stock?

Core Viewpoint - Carnival Corp has shown strong financial performance and growth in travel demand, yet its stock remains undervalued and has not reached pre-pandemic levels [1][2]. Financial Performance - Carnival's stock has increased by only 3% this year, with a modest five-year gain of 28% as of November 28 [2]. - The company reported all-time high financials in its last earnings report in September and raised its guidance for the year [7]. Debt Concerns - Carnival's long-term debt stands at $25.1 billion, a slight decrease from $25.9 billion nine months prior [3]. - The interest coverage ratio has improved since its decline in 2020 but remains below pre-pandemic levels, indicating ongoing concerns about the company's ability to manage its debt [4][6]. Demand and Market Conditions - Demand for Carnival cruises remains strong, with advanced bookings for 2026 matching those of 2025, despite rising prices [7]. - Economic uncertainties and potential recession fears may be causing investor caution regarding future demand, contributing to the stock's underperformance [8]. Valuation - Carnival's stock is currently trading at a forward price-to-earnings (P/E) multiple of 11, significantly lower than the S&P 500 average of 22, suggesting it is undervalued [11]. - The company may still perform well even in challenging economic conditions due to its value proposition for travelers [12].