Is Carnival Stock Still a Buy After a 227% Three-Year Rally?

The question on every investor's mind is whether Carnival Corporation (CCL) remains a compelling buy after a staggering 227% surge over the past three years. With the stock trading at $25.82 as of November 2025, the answer hinges on two critical pillars: valuation metrics and future growth potential. Let's break it down.

Valuation: A Mixed Bag of Signals

Carnival's current valuation appears attractive relative to the broader market but raises red flags when scrutinized against its own debt-laden history. The stock trades at a P/E ratio of 14.0, slightly above the cruise industry's average of 13.74, but significantly lower than the S&P 500's P/E of 23.0. This suggests the market is pricing in a discount for Carnival's cyclical exposure, yet the company's earnings power-bolstered by record net income of $1.9 billion in Q3 2025-justifies a premium.

However, the P/B ratio of 4.01 (or 3.48, depending on the source) hints at overvaluation. Carnival's book value has been inflated by its aggressive fleet expansion, but its debt-to-equity ratio remains elevated at 1.2x, a lingering scar from the pandemic. The P/FCF ratio of 12.7 is more favorable, indicating the company generates robust free cash flow to service its debt. Analysts project a 26.96% upside to $35.07, but this assumes continued margin expansion-a bet that hinges on Carnival's ability to maintain pricing power.

Growth Potential: A Tailwind-Driven Strategy

Carnival's 2025-2030 growth strategy is nothing short of transformative. The company is adding 1.5% annual capacity growth through LNG-powered ships and strategic brand synergies according to industry analysis, while its exclusive destinations like Celebration Key in the Bahamas are expected to drive high-margin onboard spending as reported by Reuters. These initiatives align with industry trends: global cruise revenue is projected to grow at a 4.81% CAGR through 2029, and U.S. cruise bookings are on track to hit 21.7 million in 2026.

The real magic lies in operational efficiency. Carnival's cost management has been stellar, with net yields hitting all-time highs. Its ability to raise prices-supported by pent-up demand and a 46.5-year-old average cruise tourist-gives it a buffer against inflation. Even with 2025 adjusted EBITDA expected to exceed $7 billion, the company's margins remain below pre-pandemic peaks, leaving room for improvement.

Analyst Consensus: Optimism, But With Caution

The analyst community is split but leans bullish. Of 17 analysts rate CCL a "Buy", with a $33.68 average price target (21.31% upside from the current price) according to market data. This optimism is fueled by Carnival's resilient demand-nearly half of 2026 bookings are already locked in-and its diversified brand portfolio. However, risks persist: macroeconomic shifts, inflationary pressures, and the cyclical nature of travel could temper growth.

The Bottom Line: A Buy, But With Eyes Wide Open

Carnival's valuation is not a screaming bargain, but its growth trajectory and industry tailwinds justify a "Buy" rating. The stock's 227% rally reflects its recovery from pandemic lows, but the company is now in a different league-one where it's not just surviving but dominating. The key is to monitor its debt reduction progress and ensure that its aggressive fleet expansion doesn't outpace demand. For investors with a 3-5 year horizon, CCL offers a compelling mix of defensive earnings and aspirational growth.