Which Cruise Line to Invest In: Carnival vs. Royal Caribbean

Carnival and Royal Caribbean are the top two cruise line companies, both with high occupancy rates and massive debts from the pandemic. While both have retired debt and reduced interest expenses, Royal Caribbean has a lower debt-to-equity ratio, with a book value of $9.4 billion and a debt-to-equity ratio of 2.0, compared to Carnival's $12 billion and 2.2 ratio. Royal Caribbean has reinstated its dividend, showing confidence in its financials.

Carnival Corporation (CCL) and Royal Caribbean Cruises Ltd. (RCL) are the two leading cruise line companies, both with high occupancy rates and substantial debts incurred during the pandemic. While both companies have undertaken efforts to retire debt and reduce interest expenses, Royal Caribbean has a more favorable debt-to-equity ratio compared to Carnival. This article delves into the debt management strategies of both companies and their respective financial outlooks.

Debt Management and Financial Health

Carnival has recently announced a $1.25 billion private offering of senior unsecured notes maturing in 2029. The proceeds from this offering will be used to redeem $2 billion of older 6.000% notes also due in 2029, aiming to lower interest costs and improve the company's balance sheet. This move reflects Carnival's focus on financial discipline and investor confidence Carnival Issues $1.25 Billion Notes To Ease Debt Load^[2].

In contrast, Royal Caribbean has a lower debt-to-equity ratio. As of the latest available data, Royal Caribbean's book value is $9.4 billion with a debt-to-equity ratio of 2.0, compared to Carnival's $12 billion and a 2.2 ratio. Royal Caribbean's lower debt-to-equity ratio indicates a more manageable debt load and a stronger financial position Highland Capital Management LLC Has $3.19 Million Holdings in Royal Caribbean Cruises Ltd. $RCL^[1].

Dividend Reinstatement

Royal Caribbean has taken a significant step to restore shareholder confidence by reinstating its dividend. The company declared a quarterly dividend of $1.00, up from the previous $0.75, reflecting a positive outlook for shareholders. This move underscores Royal Caribbean's confidence in its financial health and ability to generate cash flow Highland Capital Management LLC Has $3.19 Million Holdings in Royal Caribbean Cruises Ltd. $RCL^[1].

Analyst Ratings and Price Targets

Both companies have received varied analyst ratings and price targets. Royal Caribbean has an average rating of "Moderate Buy" with an average target price of $326.95, while Carnival's analysts have a more mixed sentiment with a range of ratings from "Buy" to "Hold" Highland Capital Management LLC Has $3.19 Million Holdings in Royal Caribbean Cruises Ltd. $RCL^[1].

Conclusion

Both Carnival and Royal Caribbean are actively managing their debt and improving their financial health. While Carnival is focusing on refinancing to reduce interest costs, Royal Caribbean's lower debt-to-equity ratio and dividend reinstatement indicate a stronger financial position. Investors should closely monitor both companies' debt management strategies and financial outlooks as they navigate the post-pandemic recovery.

References

Highland Capital Management LLC Has $3.19 Million Holdings in Royal Caribbean Cruises Ltd. $RCL^[1] https://www.marketbeat.com/instant-alerts/filing-highland-capital-management-llc-has-319-million-holdings-in-royal-caribbean-cruises-ltd-rcl-2025-10-05/
Carnival Issues $1.25 Billion Notes To Ease Debt Load^[2] https://www.tradingview.com/news/gurufocus:9b6520340094b:0-carnival-issues-1-25-billion-notes-to-ease-debt-load/