I Predicted That Carnival Stock Would Beat the Market in 2025. Can It Repeat in 2026?

Core Viewpoint - Carnival Corp. has shown strong performance in 2025, outperforming the S&P 500, and is well-positioned for continued growth in 2026 despite high debt levels [1][2][3] Financial Performance - Carnival set new records in 2025, achieving record revenue, net yields, operating income, customer deposits, and adjusted EBITDA [2][3] - The company reported a strong fourth fiscal quarter, exceeding guidance across various metrics, and is guiding for increased profitability in 2026 [3] Debt Management - Carnival has a significant debt burden from the pandemic, but has been responsibly paying it down, with $19 billion refinanced in 2025, reducing debt by $10 billion from its 2023 peak [4][5] - Continued lower interest rates could further enhance Carnival's ability to save on interest and expedite debt repayment [5] Market Position and Valuation - Carnival's stock trades at a forward one-year P/E ratio of less than 11, indicating it is undervalued, especially given its leadership in the cruise industry and record profits [6] - The recent restart of dividends signals management's confidence in the company's future prospects [6] Future Outlook - If interest rates continue to decline, Carnival is expected to potentially outperform the market again in 2026, adding value to a diversified portfolio [7]