Cruise ship company Carnival (NYSE:CCL) missed Wall Street’s revenue expectations in Q4 CY2025, but sales rose 6.6% year on year to $6.33 billion. Its non-GAAP profit of $0.34 per share was 38.6% above analysts’ consensus estimates.
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Carnival (CCL) Q4 CY2025 Highlights:
- Revenue: $6.33 billion vs analyst estimates of $6.37 billion (6.6% year-on-year growth, 0.6% miss)
- Adjusted EPS: $0.34 vs analyst estimates of $0.25 (38.6% beat)
- Adjusted EBITDA: $1.48 billion vs analyst estimates of $1.37 billion (23.3% margin, 8.1% beat)
- Adjusted EPS guidance for the upcoming financial year 2026 is $2.48 at the midpoint, beating analyst estimates by 2.5%
- EBITDA guidance for the upcoming financial year 2026 is $7.63 billion at the midpoint, above analyst estimates of $7.53 billion
- Operating Margin: 11.6%, up from 9.4% in the same quarter last year
- Passenger Cruise Days: 24.6 million, in line with the same quarter last year
- Market Capitalization: $40.84 billion
StockStory’s Take
Carnival’s fourth quarter saw strong investor enthusiasm, despite sales missing Wall Street’s expectations. Management attributed the positive outcome to effective cost controls, robust onboard spending, and resilient booking trends across its global cruise brands. CEO Josh Weinstein highlighted, “We achieved historical fourth quarter highs for revenues, yields, operating income and EBITDA,” while noting that the company’s diversified portfolio enabled it to outperform in both North America and Europe, even amid lower consumer sentiment.
Looking ahead, Carnival’s guidance is anchored by expectations for continued yield growth, disciplined cost management, and expansion of its destination offerings. Management pointed to record high booking prices and a healthy booking curve for 2026, supported by strong demand in both North America and Europe. Weinstein emphasized that the company is “very well positioned to top 2025’s results in 2026,” and noted ongoing investments in digital marketing, loyalty programs, and destination development as key drivers for future performance.
Key Insights from Management’s Remarks
Management identified robust onboard spending, effective cost discipline, and strategic destination investments as central to both recent results and their outlook for the year ahead.
- Onboard revenue growth: Strong per-passenger spending on shipboard activities, retail, and experiences contributed meaningfully to yield improvement, with management noting onboard revenue per diem significantly outperformed the prior year.
- Cost efficiency initiatives: Carnival executed on a range of cost-saving measures, including optimizing dry dock schedules and leveraging procurement scale, which helped offset inflation and higher regulatory expenses.
- Destination development: New and expanded private destination offerings, such as Celebration Key in Grand Bahama and RelaxAway at Half Moon Cay, are being positioned as long-term revenue drivers and differentiators relative to land-based alternatives.
- Booking momentum: The company reported record booking volumes for both 2026 and 2027, with customer deposits at an all-time high, despite low U.S. consumer sentiment readings. This was attributed to effective marketing and strong brand positioning.
- Capital structure simplification: Carnival announced plans to unify its dual-listed corporate structure, aiming to reduce administrative costs, streamline governance, and improve share liquidity, with a shareholder vote planned for the second quarter of 2026.
Drivers of Future Performance
Carnival expects yield growth, cost management, and destination investments to shape revenue and profitability in the coming year.
- Yield and pricing discipline: Management projects continued low to mid-single-digit yield growth, supported by high prices on advance bookings and a focus on maintaining price integrity over discounting to fill ships.
- Cost controls and efficiency: The company plans to leverage its scale and implement further efficiency initiatives, including the use of AI for marketing and operational processes, to mitigate ongoing inflation and higher dry dock expenses.
- New destination offerings: Expansion of private destinations—including the full-year impact of Celebration Key and the phased rollout of RelaxAway—are expected to drive incremental ticket and onboard revenues, with management viewing these as competitive advantages versus land-based vacations.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace of adoption and incremental revenue from new destinations like Celebration Key and RelaxAway, (2) evidence of sustained booking strength and pricing discipline, particularly as industry capacity expands in the Caribbean, and (3) the impact of ongoing cost control initiatives and digital marketing investments. Execution in these areas will be crucial for sustaining margin gains.
Carnival currently trades at $31.15, up from $28.33 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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