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Carnival's EBITDA Momentum Picks Up: Is Margin Expansion Sustainable?
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Key Takeaways
CCL's Q2 adjusted EBITDA grew to $1.51B, as margins rose 200 bps from 2019 levels.
Net yields climbed 6.5% year over year, fueled by pricing strength and robust close-in bookings.
CCL raised its FY25 EBITDA outlook to $6.9 billion, up from the prior expectation of $6.7 billion.
Carnival Corporation & plc (CCL - Free Report) is making waves with a strong profitability rebound, posting its highest second-quarter EBITDA margins in nearly 20 years. In the second quarter of fiscal 2025, the cruise operator posted adjusted EBITDA of $1.51 billion, up from $1.2 billion reported in the prior-year quarter. The company’s EBITDA margin increased 200 basis points from 2019 levels.
Carnival attributes its margin improvement to pricing strength and operational leverage. During the quarter, yields jumped nearly 6.5% year over year, beating the company’s guidance by 200 basis points. Solid ticket sales and better-than-expected onboard spending, backed by robust close-in bookings, added to the positives.
In the fiscal second quarter, Carnival surpassed two of its three 2026 SEA Change targets ahead of its schedule. The company’s EBITDA per available lower berth day rose 52% from 2023 levels, while return on invested capital increased 12.5%, underscoring stronger unit economics.
With the net debt-to-EBITDA ratio sequentially improving (from 4.1 to 3.7 in the fiscal second quarter) and interest expense declining, EBITDA growth is feeding directly into bottom-line metrics. While Carnival continues to face macro risks like fuel price volatility and geopolitical disruption, the company’s profitability trajectory now appears firmly in expansion mode.
With momentum firmly in its corner, Carnival raised its full-year 2025 adjusted EBITDA outlook to approximately $6.9 billion, reflecting a rise of 10% from 2024 levels and ahead of March guidance of $6.7 billion. Management reiterated expectations for stronger EBITDA in the back half of fiscal 2025.
How It Stacks Up to Competitors
Royal Caribbean Cruises Ltd. (RCL - Free Report) continues to emphasize a premium guest mix, large-scale new builds, and yield discipline to drive EBITDA growth. In the first quarter, Royal Caribbean reported EBITDA margins of 35%, reflecting a 360 basis point improvement year over year. Strong close-in bookings and favorable pricing drove revenue outperformance, while cost growth remained minimal due to expense timing shifts. The company’s WAVE season was its strongest ever, setting the stage for continued momentum. In 2025, Royal Caribbean expects 15% growth in adjusted EBITDA and 210 basis point growth in gross EBITDA margin. Attributes of disciplined cost management, new ship additions (like Star of the Seas), and expanding private destinations are likely to benefit the company in the upcoming periods.
Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) is executing a transformation agenda focused on operational efficiency and fleet optimization. In first-quarter 2025, Norwegian Cruise posted adjusted EBITDA of $453 million and a trailing 12-month EBITDA margin of 35.5%, up 280 basis points from the prior year. Management attributes the progress to disciplined cost control, supported by a company-wide efficiency program targeting $300 million in savings. The delivery of Norwegian Aqua, along with digital tools like the revamped NCL app, is likely supporting guest engagement and upsell rates. While Norwegian Cruise’s overall scale is smaller, its cost transformation efforts and stable onboard revenue trends are positioning it for steady EBITDA expansion through 2025. In 2025, the company expects adjusted EBITDA to be approximately $2.72 billion.
CCL’s Price Performance, Valuation & Estimates
Shares of Carnival have gained 40.5% in the past three months compared with the industry’s growth of 16.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, CCL trades at a forward price-to-earnings ratio of 13.29X, significantly below the industry’s average of 18.98X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CCL’s fiscal 2025 and 2026 earnings implies a year-over-year uptick of 38% and 13.4%, respectively. The EPS estimates for fiscal 2025 and 2026 have increased in the past 30 days.
Image: Bigstock
Carnival's EBITDA Momentum Picks Up: Is Margin Expansion Sustainable?
Key Takeaways
Carnival Corporation & plc (CCL - Free Report) is making waves with a strong profitability rebound, posting its highest second-quarter EBITDA margins in nearly 20 years. In the second quarter of fiscal 2025, the cruise operator posted adjusted EBITDA of $1.51 billion, up from $1.2 billion reported in the prior-year quarter. The company’s EBITDA margin increased 200 basis points from 2019 levels.
Carnival attributes its margin improvement to pricing strength and operational leverage. During the quarter, yields jumped nearly 6.5% year over year, beating the company’s guidance by 200 basis points. Solid ticket sales and better-than-expected onboard spending, backed by robust close-in bookings, added to the positives.
In the fiscal second quarter, Carnival surpassed two of its three 2026 SEA Change targets ahead of its schedule. The company’s EBITDA per available lower berth day rose 52% from 2023 levels, while return on invested capital increased 12.5%, underscoring stronger unit economics.
With the net debt-to-EBITDA ratio sequentially improving (from 4.1 to 3.7 in the fiscal second quarter) and interest expense declining, EBITDA growth is feeding directly into bottom-line metrics. While Carnival continues to face macro risks like fuel price volatility and geopolitical disruption, the company’s profitability trajectory now appears firmly in expansion mode.
With momentum firmly in its corner, Carnival raised its full-year 2025 adjusted EBITDA outlook to approximately $6.9 billion, reflecting a rise of 10% from 2024 levels and ahead of March guidance of $6.7 billion. Management reiterated expectations for stronger EBITDA in the back half of fiscal 2025.
How It Stacks Up to Competitors
Royal Caribbean Cruises Ltd. (RCL - Free Report) continues to emphasize a premium guest mix, large-scale new builds, and yield discipline to drive EBITDA growth. In the first quarter, Royal Caribbean reported EBITDA margins of 35%, reflecting a 360 basis point improvement year over year. Strong close-in bookings and favorable pricing drove revenue outperformance, while cost growth remained minimal due to expense timing shifts. The company’s WAVE season was its strongest ever, setting the stage for continued momentum. In 2025, Royal Caribbean expects 15% growth in adjusted EBITDA and 210 basis point growth in gross EBITDA margin. Attributes of disciplined cost management, new ship additions (like Star of the Seas), and expanding private destinations are likely to benefit the company in the upcoming periods.
Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) is executing a transformation agenda focused on operational efficiency and fleet optimization. In first-quarter 2025, Norwegian Cruise posted adjusted EBITDA of $453 million and a trailing 12-month EBITDA margin of 35.5%, up 280 basis points from the prior year. Management attributes the progress to disciplined cost control, supported by a company-wide efficiency program targeting $300 million in savings. The delivery of Norwegian Aqua, along with digital tools like the revamped NCL app, is likely supporting guest engagement and upsell rates. While Norwegian Cruise’s overall scale is smaller, its cost transformation efforts and stable onboard revenue trends are positioning it for steady EBITDA expansion through 2025. In 2025, the company expects adjusted EBITDA to be approximately $2.72 billion.
CCL’s Price Performance, Valuation & Estimates
Shares of Carnival have gained 40.5% in the past three months compared with the industry’s growth of 16.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, CCL trades at a forward price-to-earnings ratio of 13.29X, significantly below the industry’s average of 18.98X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CCL’s fiscal 2025 and 2026 earnings implies a year-over-year uptick of 38% and 13.4%, respectively. The EPS estimates for fiscal 2025 and 2026 have increased in the past 30 days.
Image Source: Zacks Investment Research
CCL stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.