Carnival Stock Has a Lot to Prove in 2025

Last year was great for investors in cruise line stocks, but the water has been a little more choppy in 2025. Shares of Carnival (NYSE: CCL) (NYSE: CUK), the world's largest cruise line operator by revenue, have declined 16% so far this year. Smaller rival Norwegian Cruise Line (NYSE: NCLH) has fared even worse, with a 22% slide in 2025. Market cap leader Royal Caribbean (NYSE: RCL), meanwhile, has fared a little better, with just a 5% drop. But just last year, Carnival, Royal Caribbean, and NCL soared 34%, 79%, and 28%, respectively.

A couple of external factors have weighed on the country's three largest cruise lines. The escalating tariff trade war and mounting geopolitical disharmony could be eating at demand and risk profile for ocean getaways to exotic ports of call. Consumer confidence has fallen for three consecutive months, potentially cooling the ability for folks to pay for their watery escapes. Finally, Commerce Secretary Howard Lutnick last month mentioned cracking down on cruise ship operators sailing Panama- or Liberia-flagged ships to avoid paying U.S. taxes. That's a challenge that previous administrations have failed to push through, and now it's one more uncertainty to worry investors.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

Carnival has a chance to nudge momentum back to the side of the bulls. It reports its fiscal first-quarter results on Friday morning, and that's going to be a big update for all cruise line fans and investors.

The cay to a turnaround

Analysts are heading into this week's telltale report with cautious optimism. They see Carnival's revenue rising a modest 6% to $5.74 billion in the fiscal first quarter of 2025, the weakest top-line jump since the pandemic-related shutdown. Wall Street pros are bracing for a modest profit of $0.02 a share, which would reverse a year-ago deficit in a seasonally sleepy quarter. It's also ahead of the breakeven results that the cruising bellwether was offering up as guidance for the quarter back in December.

Don't be surprised if Carnival earns more than its two cents' worth. It has been routinely landing comfortably ahead of expectations. Lately, reality has delivered outsize beats against where the analysts were perched.

Data source: Yahoo! Finance. EPS = earnings per share (adjusted).

And there's more to this story than just the streak of nine consecutive quarters of bottom-line beats. For the past six reports, the positive surprises have been double- if not triple-digit earnings beats.

Image source: Getty Images.

Bon voyage

There will be more to watch on Friday than just the financials and any updates to guidance. Customer deposits for future sailings at the end of November were 7% higher than they were a year earlier. That's a good indicator of the cruise line's near-term prospects. If demand is starting to soften since when Royal Caribbean and Norwegian reported last month, we'll see it happen in that metric. It will also be interesting to see if Carnival addresses Lutnick's comments about the industry's tax-advantaged operations.

A silver lining to Carnival's year-to-date retreat is that a stock that was reasonably priced before has gotten even cheaper. Carnival's guidance in late December was for a full-year profit of $1.70 a share. Despite the swirling headwinds, analysts have been bumping their targets even higher in recent weeks. They now see Carnival earning $1.76 a share in 2025. You can buy the stock for less than 12 times this year's projected profitability. All investors need now is for Carnival to assure the market by letting them know to dive in because the water's fine.

Should you invest $1,000 in Carnival Corp. right now?

Before you buy stock in Carnival Corp., consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Carnival Corp. wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $745,726!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of March 17, 2025

Rick Munarriz has positions in Carnival Corp., Norwegian Cruise Line, and Royal Caribbean Cruises. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.