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Carnival Corporation Ltd. (CCL - Free Report) reported better-than-expected third-quarter fiscal 2026 results on Sept. 29, with adjusted earnings and revenues surpassing the Zacks Consensus Estimate by 5.1% and 0.9%, respectively. Revenues increased year over year, while adjusted earnings remained flat.
Shares of Carnival have gained 18.1% since the earnings release, following the better-than-expected results and an increase in fiscal 2026 adjusted earnings guidance.
Digging Deeper Into CCL’s Q3 Results
Carnival reported adjusted earnings per share (EPS) of $1.43, unchanged from the prior-year quarter, while revenues of $8.44 billion increased 3.5% year over year. Passenger ticket revenues rose 1.8%, while onboard and other revenues increased 6.7%. Constant-currency net yields grew 2.4%, supported by strong close-in demand and onboard spending. Adjusted EBITDA totaled $2.99 billion, unchanged year over year but $110 million above June guidance.
Furthermore, Carnival raised its fiscal 2026 adjusted EPS guidance to $2.24 (compared with the prior expectation of $2.22) and expects adjusted EBITDA of approximately $7.14 billion (compared with the earlier projection of $7.11 billion). The company also increased its constant-currency net yield growth outlook to approximately 2.3%. (Read more: Carnival Q3 Earnings Beat Estimates on Record Revenues & Net Yields)
Shares of Carnival have declined 14.4% year to date (YTD), underperforming the Zacks Leisure and Recreation Services industry, the broader Zacks Consumer Discretionary sector and the S&P 500 Index, as shown in the chart below.
CCL YTD Price Performance
Image Source: Zacks Investment Research
With record bookings, destination expansion and operating efficiencies supporting its outlook, does CCL offer further upside following its post-earnings rally? Let’s assess whether investors should buy, sell or hold the stock.
Record Bookings Strengthen the FY27 Outlook
Approximately half of fiscal 2027 is already booked, with advance occupancy and pricing at record levels. Customer deposits reached a fiscal third-quarter record of $7.64 billion, increasing approximately 7% year over year despite broadly flat capacity over the next 12 months.
Booking momentum extends into fiscal 2028, with occupancy and pricing ahead of the comparable prior-year position. Reservations are also being secured further ahead of departure. With fiscal 2027 capacity expected to increase 0.5% year over year, Carnival is focused on generating higher revenues and returns from its existing fleet through pricing, onboard spending and disciplined booking management.
Celebration Key welcomed nearly 2.5 million guests during its first year and is expected to receive approximately 3.5 million in fiscal 2027 following the opening of its second pier. The number of ships calling at the destination is expected to rise to 31 from 26, with access expanding across additional Carnival brands.
Carnival is also pairing Celebration Key with RelaxAway, Half Moon Cay on more itineraries. In fiscal 2027, 35% of Carnival Cruise Line’s Caribbean capacity is expected to feature both destinations on the same cruise. These investments broaden its exclusive destination offering and support efforts to differentiate itineraries and increase returns from existing ships.
Cost Savings and Lower Debt Strengthen Financial Flexibility
Carnival’s fuel consumption per available lower berth day has declined 26% since 2019, representing nearly $750 million in savings at the fuel prices used in September guidance. Sourcing initiatives, technology investments and operating efficiencies are also supporting cost discipline.
Total debt declined to $23.91 billion at Aug. 31, 2026, from $26.64 billion at the end of fiscal 2025. During the quarter, Carnival redeemed $500 million of 7% notes and received an investment-grade rating from a second credit-rating agency, marking further progress in strengthening its financial position.
Carnival repurchased approximately 45 million shares for nearly $1.2 billion and paid $618 million in year-to-date dividends. Repurchases and expected full-year dividend payments together represent nearly $2 billion in shareholder returns. The company continues to expect year-over-year improvement in its balance sheet and leverage metrics while funding business investments and returning capital to its shareholders.
CCL vs. RCL and NCLH: How Growth Strategies Compare
Although Carnival, Royal Caribbean Cruises Ltd. (RCL - Free Report) and Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) compete in the cruise industry, their growth priorities differ. Carnival emphasizes higher revenues and returns from its existing fleet through measured capacity growth, booking management and exclusive destinations. Royal Caribbean combines fleet expansion with new destination experiences, loyalty initiatives and digital engagement. Norwegian Cruise is working to rebuild demand and improve advance bookings through sharper marketing and a revised pricing approach at its Norwegian brand.
Royal Caribbean reported encouraging fiscal 2027 booking trends and record pricing while projecting 6.6% capacity growth in fiscal 2026. Its expanding vacation offering and cross-brand loyalty programs support a strategy combining additional capacity with greater guest engagement.
Norwegian Cruise faces a more challenging near-term revenue outlook, with advance bookings below its optimal level and constant-currency net yields expected to decline approximately 5% in 2026. Its “baseloading” approach establishes more competitive fares earlier to build reservations and reduce exposure to close-in discounting, while Great Stirrup Cay investments broaden its destination offering.
Discounted Valuation and Rising Estimates Support CCL
Carnival stock is currently trading at a discount. CCL is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 10.41, well below the industry average of 15.92. Other industry players, such as Royal Caribbean and Norwegian Cruise, have P/E ratios of 14.42 and 10.49, respectively.
CCL’s P/E Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CCL’s fiscal 2026 and 2027 earnings implies a year-over-year uptick of 0.4% and 13.2%, respectively. The EPS estimates for fiscal 2026 have increased in the past 30 days.
EPS Trend of CCL Stock
Image Source: Zacks Investment Research
CCL Stock Key Challenges: Fuel Costs and Capacity Pressures
Fuel costs remain a significant earnings headwind. In the fiscal third quarter, fuel expense increased to $615 million from $451 million a year earlier, while fuel cost per metric ton consumed, excluding emission allowances, rose to $826 from $607. Higher fuel prices reduced the updated full-year earnings outlook by 11 cents per share relative to June assumptions, absorbing much of the benefit from stronger operations. Carnival continues to favor lower fuel consumption over financial hedging, leaving profitability exposed to price swings.
The fiscal 2027 booking outlook is expected to vary across quarters. Record booked occupancy and pricing are concentrated in the second through fourth quarters. Although first-quarter fiscal 2027 bookings have recovered meaningfully, Carnival expects residual effects from the spring booking disruption to affect those sailings.
Competitive capacity additions in the Caribbean present another challenge. Carnival acknowledged that the region faces pressure from substantial industry supply growth. Meanwhile, its new loyalty program creates temporary revenue-recognition headwinds. The program is expected to be cash-flow positive from launch, but revenue deferrals are expected to reduce fourth-quarter fiscal 2026 yields by 0.6 percentage points, with an additional 0.4-point impact for fiscal 2027.
Buy, Sell or Hold CCL Stock After Its Post-Earnings Rally?
Carnival’s record advance bookings, strong pricing and expanding private destinations support a constructive fundamental outlook. Higher fiscal 2026 guidance, upward earnings estimate revisions, continued debt reduction and a valuation discount to the industry further strengthen its investment appeal.
However, CCL’s 18.1% post-earnings rally warrants a measured approach to new positions. Elevated fuel costs, residual booking pressure on early-2027 sailings and substantial Caribbean capacity additions likely temper the near-term earnings outlook.
View the Zacks #1 Rank List
Image: Bigstock
Should You Buy, Sell or Hold Carnival Stock Post Q3 Earnings?
Key Takeaways
Carnival Corporation Ltd. (CCL - Free Report) reported better-than-expected third-quarter fiscal 2026 results on Sept. 29, with adjusted earnings and revenues surpassing the Zacks Consensus Estimate by 5.1% and 0.9%, respectively. Revenues increased year over year, while adjusted earnings remained flat.
Shares of Carnival have gained 18.1% since the earnings release, following the better-than-expected results and an increase in fiscal 2026 adjusted earnings guidance.
Digging Deeper Into CCL’s Q3 Results
Carnival reported adjusted earnings per share (EPS) of $1.43, unchanged from the prior-year quarter, while revenues of $8.44 billion increased 3.5% year over year. Passenger ticket revenues rose 1.8%, while onboard and other revenues increased 6.7%. Constant-currency net yields grew 2.4%, supported by strong close-in demand and onboard spending. Adjusted EBITDA totaled $2.99 billion, unchanged year over year but $110 million above June guidance.
Furthermore, Carnival raised its fiscal 2026 adjusted EPS guidance to $2.24 (compared with the prior expectation of $2.22) and expects adjusted EBITDA of approximately $7.14 billion (compared with the earlier projection of $7.11 billion). The company also increased its constant-currency net yield growth outlook to approximately 2.3%. (Read more: Carnival Q3 Earnings Beat Estimates on Record Revenues & Net Yields)
Shares of Carnival have declined 14.4% year to date (YTD), underperforming the Zacks Leisure and Recreation Services industry, the broader Zacks Consumer Discretionary sector and the S&P 500 Index, as shown in the chart below.
CCL YTD Price Performance
Image Source: Zacks Investment Research
With record bookings, destination expansion and operating efficiencies supporting its outlook, does CCL offer further upside following its post-earnings rally? Let’s assess whether investors should buy, sell or hold the stock.
Record Bookings Strengthen the FY27 Outlook
Approximately half of fiscal 2027 is already booked, with advance occupancy and pricing at record levels. Customer deposits reached a fiscal third-quarter record of $7.64 billion, increasing approximately 7% year over year despite broadly flat capacity over the next 12 months.
Booking momentum extends into fiscal 2028, with occupancy and pricing ahead of the comparable prior-year position. Reservations are also being secured further ahead of departure. With fiscal 2027 capacity expected to increase 0.5% year over year, Carnival is focused on generating higher revenues and returns from its existing fleet through pricing, onboard spending and disciplined booking management.
Private Destinations Expand Carnival’s Growth Potential
Celebration Key welcomed nearly 2.5 million guests during its first year and is expected to receive approximately 3.5 million in fiscal 2027 following the opening of its second pier. The number of ships calling at the destination is expected to rise to 31 from 26, with access expanding across additional Carnival brands.
Carnival is also pairing Celebration Key with RelaxAway, Half Moon Cay on more itineraries. In fiscal 2027, 35% of Carnival Cruise Line’s Caribbean capacity is expected to feature both destinations on the same cruise. These investments broaden its exclusive destination offering and support efforts to differentiate itineraries and increase returns from existing ships.
Cost Savings and Lower Debt Strengthen Financial Flexibility
Carnival’s fuel consumption per available lower berth day has declined 26% since 2019, representing nearly $750 million in savings at the fuel prices used in September guidance. Sourcing initiatives, technology investments and operating efficiencies are also supporting cost discipline.
Total debt declined to $23.91 billion at Aug. 31, 2026, from $26.64 billion at the end of fiscal 2025. During the quarter, Carnival redeemed $500 million of 7% notes and received an investment-grade rating from a second credit-rating agency, marking further progress in strengthening its financial position.
Carnival repurchased approximately 45 million shares for nearly $1.2 billion and paid $618 million in year-to-date dividends. Repurchases and expected full-year dividend payments together represent nearly $2 billion in shareholder returns. The company continues to expect year-over-year improvement in its balance sheet and leverage metrics while funding business investments and returning capital to its shareholders.
CCL vs. RCL and NCLH: How Growth Strategies Compare
Although Carnival, Royal Caribbean Cruises Ltd. (RCL - Free Report) and Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) compete in the cruise industry, their growth priorities differ. Carnival emphasizes higher revenues and returns from its existing fleet through measured capacity growth, booking management and exclusive destinations. Royal Caribbean combines fleet expansion with new destination experiences, loyalty initiatives and digital engagement. Norwegian Cruise is working to rebuild demand and improve advance bookings through sharper marketing and a revised pricing approach at its Norwegian brand.
Royal Caribbean reported encouraging fiscal 2027 booking trends and record pricing while projecting 6.6% capacity growth in fiscal 2026. Its expanding vacation offering and cross-brand loyalty programs support a strategy combining additional capacity with greater guest engagement.
Norwegian Cruise faces a more challenging near-term revenue outlook, with advance bookings below its optimal level and constant-currency net yields expected to decline approximately 5% in 2026. Its “baseloading” approach establishes more competitive fares earlier to build reservations and reduce exposure to close-in discounting, while Great Stirrup Cay investments broaden its destination offering.
Discounted Valuation and Rising Estimates Support CCL
Carnival stock is currently trading at a discount. CCL is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 10.41, well below the industry average of 15.92. Other industry players, such as Royal Caribbean and Norwegian Cruise, have P/E ratios of 14.42 and 10.49, respectively.
CCL’s P/E Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CCL’s fiscal 2026 and 2027 earnings implies a year-over-year uptick of 0.4% and 13.2%, respectively. The EPS estimates for fiscal 2026 have increased in the past 30 days.
EPS Trend of CCL Stock
Image Source: Zacks Investment Research
CCL Stock Key Challenges: Fuel Costs and Capacity Pressures
Fuel costs remain a significant earnings headwind. In the fiscal third quarter, fuel expense increased to $615 million from $451 million a year earlier, while fuel cost per metric ton consumed, excluding emission allowances, rose to $826 from $607. Higher fuel prices reduced the updated full-year earnings outlook by 11 cents per share relative to June assumptions, absorbing much of the benefit from stronger operations. Carnival continues to favor lower fuel consumption over financial hedging, leaving profitability exposed to price swings.
The fiscal 2027 booking outlook is expected to vary across quarters. Record booked occupancy and pricing are concentrated in the second through fourth quarters. Although first-quarter fiscal 2027 bookings have recovered meaningfully, Carnival expects residual effects from the spring booking disruption to affect those sailings.
Competitive capacity additions in the Caribbean present another challenge. Carnival acknowledged that the region faces pressure from substantial industry supply growth. Meanwhile, its new loyalty program creates temporary revenue-recognition headwinds. The program is expected to be cash-flow positive from launch, but revenue deferrals are expected to reduce fourth-quarter fiscal 2026 yields by 0.6 percentage points, with an additional 0.4-point impact for fiscal 2027.
Buy, Sell or Hold CCL Stock After Its Post-Earnings Rally?
Carnival’s record advance bookings, strong pricing and expanding private destinations support a constructive fundamental outlook. Higher fiscal 2026 guidance, upward earnings estimate revisions, continued debt reduction and a valuation discount to the industry further strengthen its investment appeal.
However, CCL’s 18.1% post-earnings rally warrants a measured approach to new positions. Elevated fuel costs, residual booking pressure on early-2027 sailings and substantial Caribbean capacity additions likely temper the near-term earnings outlook.
Against this backdrop, existing shareholders may prefer to retain this Zacks Rank #3 (Hold) stock, while new investors could wait for a more attractive entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.