Carnival Corporation & plc (CCL) is the largest global cruise company with more than 90 ships in service at the end of fiscal 2024, operating under multiple brands including Carnival Cruise Lines, Holland America, Princess Cruises, and Seabourn in North America; P&O Cruises and Cunard Line in the United Kingdom; Aida in Germany; and Costa Cruises in Southern Europe [4]. The company's business model involves providing leisure travel services across four segments: NAA Cruise Operations, Europe Cruise Operations, Cruise Support, and Tour and Other, with its portfolio of brands attracting 14 million guests in 2024 [4, 5].

• Record first quarter revenue of $5.8 billion in Q1 2025, up over $400 million compared to the prior year [3]
• Earnings per share of $0.13 in Q1 2025, exceeding analysts' consensus estimates of $0.02 by $0.11 (550% positive surprise) [1, 2]
• EBITDA reached $1.2 billion, representing a nearly 40% year-over-year increase [2]
• Operating income nearly doubled for the quarter, with operating and EBITDA margins improving over 400 basis points year-over-year [2]

• Annual revenue for fiscal year 2024 was $25.02 billion, representing 15.88% growth from the previous year [2]
• Revenue for the trailing twelve months ending February 2025 was $25.43 billion, up 12.66% year-over-year [2]
• The company achieved a robust 7.3% yield increase in Q1 2025, surpassing yield guidance and building on last year's 17% improvement [2]
• Carnival's revenue recovered dramatically after the pandemic, with 77.44% growth in FY 2023 and 537.79% growth in FY 2022 following the severe impacts in 2020-2021 [2]
• Future revenue growth is projected at approximately 4.2% on average over the next 5 fiscal years, according to analyst forecasts [3]

• Total debt stood at $27 billion as of Q1 2025, reduced by $0.5 billion during the quarter and down from $30.7 billion one year prior [2, 5]
• The company's debt-to-equity ratio is 294.2%, which is considered high and represents a significant financial burden [1, 5]
• Interest coverage ratio is 2.4x, indicating limited but adequate ability to service debt obligations [1, 2]
• Carnival has successfully refinanced $5.5 billion in debt, reducing annual interest expense by $145 million and lowering its average cash interest rate to 4.6% [2]
• Cash and short-term investments totaled $833 million, with customer deposits increasing by over $300 million compared to the prior year [1, 2]

CEO Josh Weinstein has led the company's post-pandemic recovery, implementing effective strategies to rebuild revenue and manage the substantial debt burden while focusing on operational efficiencies and yield improvement [2, 3]. Management has demonstrated solid execution in refinancing debt, reducing interest expenses by $100 million for the year, and is on track to meet 2026 financial targets one year early, with ROIC expected to hit 12% and EBITDA per ALBD projected to be more than 50% higher than two years ago [2].

Based on DCF valuation models, CCL appears to be undervalued, with estimated fair values ranging from $31.77 (Alpha Spread) to $7.46 (ValueInvesting.io), compared to the current market price of approximately $21.44 [1, 2, 3]. The company trades at a P/S ratio of 1.08, reflecting its revenue generation capability despite ongoing debt concerns [2]. The wide range in valuation estimates reflects uncertainty about the company's ability to continue reducing its debt burden while maintaining growth momentum in a competitive industry [3, 4].

Carnival faces several significant risks including its substantial debt burden with a debt-to-equity ratio of 294.2% and limited interest coverage of 2.4x [1, 5]. Additional concerns include intensified competition within the cruise industry that could affect market share, potential fluctuations in fuel prices, foreign currency values, and macroeconomic/geopolitical volatility that could impact consumer demand for cruise vacations [2, 4, 5].

Carnival Corporation presents a mixed investment case with strong revenue growth and operational improvements counterbalanced by significant debt concerns. Given the company's steady progress in debt reduction, yield improvements, and market leadership position, a cautious BUY recommendation is warranted for investors with moderate risk tolerance and a long-term investment horizon, contingent on continued execution of the debt reduction strategy and maintenance of strong consumer demand.