CCL F3Q25 - "Truly outstanding quarter", says CEO. What's next?

Cheat Sheets presented by stocktwits

September 29, 2025

Carnival Investment Report - Q3 2025 Cruise Industry Leadership & Record Profitability

CARNIVAL (CCL)

🚢⚓ World's Largest Cruise Company | 29 Ships Across 9 Iconic Brands

Q3 2025 Results | $8.2B Revenue, Record Net Income, 8 Consecutive Quarters of Record Performance

💰 Market Cap: $40.2B | 🚢 Fleet: 29 Ships | 📈 Revenue: +10% YoY ($8.2B)
👨‍💼 CEO Josh Weinstein | 📊 Yield Growth: +6.5% | 💳 Occupancy: 112%
$29.17
📉 -$1.45 (-4.72%) Today
Current Price
Price Target Scenarios

18-Month Horizon (2026 Targets)

$43.00
Bull Case (+47%)
Investment Grade
Record Bookings Continue
📊 Valuation Calculation:
• 2026E Revenue: $29B × P/S: 1.9x = $43.00
🚀 Key Assumptions:
Investment-grade credit rating achieved • Debt below $25B • Record 2026 bookings sustain • Yield growth 5%+ continues • Celebration Key drives incremental revenue • Premium brand strength • Fleet expansion success
$34.00
Base Case (+17%)
Steady Recovery
Continued Momentum
📊 Valuation Calculation:
• 2026E Revenue: $28B × P/S: 1.55x = $34.00
⚖️ Key Assumptions:
Stable yield growth 3-4% • Debt reduction continues to $26B • Occupancy 110-112% maintained • EBITDA margins stable • 5 new ships by 2033 on track • Operating leverage improves
$22.00
Bear Case (-25%)
Recession Risk
Debt Burden
📊 Valuation Calculation:
• 2026E Revenue: $26B × P/S: 1.1x = $22.00
🔻 Key Assumptions:
Economic recession crushes discretionary spending • Debt refinancing challenges • Booking momentum stalls • Competition from land-based resorts • $27B debt remains elevated • Interest expense pressure persists
Bottom Line for Retail Investors
🎯
Record Momentum
Beat guidance by $182M, yields +4.6% on 2.5% lower capacity, 13% ROIC first since 2007, operating income highest in 20 years, net income +10% vs 2019
💪
2026 Setup Strong
Nearly 50% booked at higher prices, longest booking curve on record, 0.8% capacity growth, no new ships in 2026, full year Celebration Key benefit
⚓
Brand Portfolio
29 ships across 9 brands, Caribbean ~33% of business, Europe ~30%, Alaska approaching double digits, overwhelming majority at double-digit returns, diversification paying off
⚠️
2026 Headwinds
Carnival Rewards -50bps yield (H2 only), destination OpEx +50bps, dry dock costs +100bps, total 200bps cost headwind to mitigate, management actively planning offsets

📊 Q3 2025 "Truly Outstanding Quarter" Results

$8.2B Revenue, Record Net Income $2.0B (+10% vs 2019), Beat Guidance by $182M

💵
$7.1B
Customer Deposits
Record Q3, +$300M YoY
📊
$1.43
EPS (Adjusted)
Beat by $0.13
🚢
+4.6%
Yield Growth
+1.1pts vs Guide
💰
13%
ROIC Achieved
First Time Since 2007

📞 Key Q3 2025 Earnings Highlights

🌟
Record Breaking Quarter
Beat guidance by $182M ($0.13/share), yields +4.6% on 2.5% lower capacity, costs beat by 1.5pts, operating income & EBITDA highest in 20 years
🏝️
Celebration Key Impact
500K guests since July opening, $1.5B media impressions at launch, 2.8M guests expected 2026, meeting all investment return expectations
📈
Leverage Improvement
Net debt/EBITDA 3.6x (from 4.3x end 2024), targeting 3.5x early FY2026, converts called today $500M cash, $11B refinanced since January
💰
2027 Unprecedented Bookings
Record 2027 bookings in Q3 window (never had more), nearly 50% of 2026 booked at higher prices, Carnival booked 8% more in Q3 2025 vs Q3 2024

📍 CEO Commentary: "This was a truly outstanding quarter with our business continuing to fire on all cylinders. We delivered all-time high net income of $2 billion, surpassing our pre-pandemic benchmark by nearly 10%" - Josh Weinstein. "13% ROIC is the first time since 2007, nearly 20 years ago, that returns have reached the teens"

💡 Strategic Priorities: Capital return "very close" at 3.5x leverage (early 2026), dividend reinstatement priority over buybacks, $500M convert redemption settles Dec 5, targeting under 3x net debt/EBITDA long-term, "debt reduction no longer has to be priority 1, 2, and 3"

👥 Customer Insights: Customer deposits record $7.1B (+$300M YoY), close-in demand stronger than forecast, onboard spending strength continues, both North America and Europe at historical record high pricing, brands improving yields "not insignificantly"

🔮 Market Outlook: FY2025 guidance raised to $2.9B net income ($2.14 EPS), 2026 capacity only +0.8%, Star Princess delivered, Half Moon Cay pier opens mid-2026, 8M Caribbean destination visits expected 2026 (half of industry), longer term targets coming Q2 FY2026

🚀 Why CCL Bulls Are Right
📈
Operational Excellence
Yields +4.6% on 2.5% lower capacity (all same-ship), 13% ROIC first since 2007, beat guidance 3 times in 2025, operating margins highest in 20 years, overwhelming majority of brands double-digit returns
💎
Market Leader Scale
World's largest cruise operator, 29 ships across 9 premium brands, 39% global market share, cost advantages vs competitors
🏝️
Destination Strategy
Celebration Key opened July 2025 (500K guests visited), 2.8M guests expected 2026, pier for 4 ships by fall 2026, 8M Caribbean destination visits 2026 (half of entire industry), Half Moon Cay pier mid-2026
📊
Financial Recovery
Net debt/EBITDA 3.6x (targeting 3.5x early 2026), $11B refinanced since January, converts called today ($600M net debt improvement), "debt reduction no longer priority 1, 2, and 3"
🐻 Why CCL Bears Have Valid Concerns
💸
Still-Elevated Debt
$27.3B total debt (net debt/EBITDA 3.6x), 600% increase in net interest expense vs 2019 on unit basis, $341M quarterly interest expense, not investment-grade yet
📉
Recession Vulnerability
Cruises are discretionary spending, first cut in recession, consumer leveraged, economic slowdown high risk, cyclical industry
⛽
2026 Cost Headwinds
Dry dock +100bps, Celebration Key/destinations +50bps, fuel volatility, EU carbon costs rising, minimal capacity growth means every $1 spent = $1 unit cost increase, actively seeking offsets
🏖️
Competition Threats
Royal Caribbean strong competitor, land-based resorts alternative, new cruise capacity industry-wide, geopolitical destination risks

This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making investment decisions.