Image Source: Pexels

Carnival (NYSE: CCL), the leading cruise line, posted record earnings results in the latest quarter, yet its stock was down about 5% on Monday.

It is a bit of a head scratcher since Carnival beat earnings and revenue estimates and raised its guidance. It’s also curious considering that Carnival stock is pretty cheap and not at all overpriced.

• Revenue: $8.15 billion, up 3% year-over-year and better than estimates of $8.1 billion. This was record revenue for the 10th straight quarter.
• Net income: $1.85 billion, up 7% year-over-year and an all-time record for the company, surpassing record previously set in 2019.
• Earnings per share (EPS): $1.33 EPS, up 6% year-over-year.
• Adjusted EPS: $1.43 adjusted EPS, up 13% year-over-year and above analysts’ estimates of $1.32 per share.

This was a phenomenal quarter delivering all-time high net income and our tenth consecutive quarter of record revenues. Strong demand and onboard spending drove a 4.6% improvement in net yields, all of which was achieved on a same ship basis,” Carnival CEO Josh Weinstein said.

Carnival saw a 4% increase in passenger ticket revenue to $5.4 billion and a 2% rise in onboard revenue to $2.7 billion. Revenue was boosted by the opening of a new exclusive destination, Celebration Key, on Grand Bahama Island.

An improving outlook

Carnival also posted a record high net yield, which jumped 4.6% from the same quarter a year ago. Net yield represents the net revenue per available lower berth day (ALBD) and is a key metric for cruise lines.

The cruise line also raised its guidance for the full fiscal year. Specifically, it is calling for:

• Net yields to increase 5.3% over fiscal 2024, which is 0.3 percentage points better than June guidance.
• Adjusted cruise costs excluding fuel per ALBD to increase by 3.3% compared to 2024, better than June guidance.
• Adjusted net income to rise 55% over 2024. This is better than the June guidance by $235 million.
• Adjusted EBITDA of approximately $7.05 billion, up 15% compared to 2024 and better than June guidance.

“Since May, booking trends have continued to strengthen with higher booking volumes than last year and far outpacing capacity growth. This momentum affirms the success of our brands’ demand generation efforts and the amazing experiences we continue to deliver, driving excess demand and ongoing pricing strength,” Weinstein said. “With nearly half of 2026 booked, which is in line with 2025 record levels … but now at historical high prices … for both our North America and Europe segments, we have built a strong base of business for next year.”

Further, 2027 looks good too, said Weinstein, as Carnival had record booking volumes in Q3.

Carnival stock got several price target upgrades from analysts after earnings were posted. It has a median price target of $36 per share, which suggests 23% upside.

Trading at just 16 times earnings and 13 times forward earnings, Carnival looks like a good option – even better with today’s dip.

More By This Author:

How Trump Has Fired Up Cannabis Stocks
Here’s Why Starbucks Stock Has Gone Cold
CarMax Stock Bottoms Out, Hits 5-Year Low