A few years ago, my wife and I booked a five-day Bahamas cruise on Carnival. It cost us about $299 a person… less than most hotel rooms (for 2 nights). And while it wasn’t luxurious, it was fun. Really fun. We ate Guy Fieri burgers, grabbed pizza at 2 a.m., and sat poolside with a frozen drink in hand while the DJ blasted ‘90s throwbacks. Sure, the crowd was iffy (families, honeymooners, and the occasional guy in Crocs making a meal out of ranch dressing) but that cruise reminded us why so many people still choose Carnival. It’s affordable, simple, and, most importantly, relaxing.

That’s what made me think long and hard (that’s what she said) when I saw Carnival Corporation’s stock is down more than 19% this year. My first thought was the obvious one… maybe they’re getting crushed by inflation, interest rates, or people cutting back on vacations. But then I started digging into the numbers… and the story shifted.

Carnival is not in distress. In fact, by almost every operational measure, it’s doing better than it has in years. In its latest quarter, the company brought in $5.81 billion in revenue, beating estimates. Earnings per share came in at $0.13… more than six times higher than analysts were expecting. Net income beat guidance by $170 million. And now, Carnival expects to bring in $2.3 billion in profit this year, up from $1.9 billion last year. Unless the definition has changed… that’s not survival mode. That’s momentum.

This isn’t some one-off earnings fluke, either. Demand is breaking records. Bookings for 2025 are at an all-time high, with both prices and occupancy rising. Carnival also set a record for 2026 bookings last quarter, even with limited remaining inventory. The company added three new ships last year, including the Sun Princess, which was recognized in Conde Nast Traveler's Readers’ Choice Awards. It’s also opening Celebration Key (a private Bahamian destination exclusive to Carnival guests) which should help increase both appeal and onboard spending.

But even with all this progress, the stock remains stubbornly low. It’s still down 71% from its pre-pandemic high, even after gaining more than 233% since the COVID bottom. That’s largely due to one word… debt.

Carnival took on a Mt Everest level amount of debt during the pandemic just to stay above water back in 2020 (pun intended). At its peak, the company was buried under over $35 billion in liabilities. But they’ve made real progress. Carnival has paid down $8 billion of that debt and recently refinanced $1 billion at lower interest. It also has $2.9 billion in untapped credit. So if that’s the case, you would think retail and institutional investors would be buying it up like hotcakes… But it seems like the market remains cautious, watching to see if consumer demand will remain strong enough to support both growth and continued debt reduction.

That said, not every analyst is a land animal. For instance, Stifel just raised its price target from $30 to $31, maintaining a Buy rating. Mizuho pushed their target to $33. Both firms see Carnival as undervalued, especially given the strength in bookings, revenue growth, and gross margins, which currently sit at 54%. The company’s trailing P/E is under 13, nearly 30% below its historical average.

The big risk, of course, is the macro picture. If travel demand dips or inflation continues to squeeze the middle class, Carnival’s momentum could stall before it pays down enough debt to really breathe. But for now, the signs are pointing in the opposite direction. Ships are full. Spending is up. And operationally, the company is performing like it did in its pre-pandemic heyday.

So because of all this evidence I just gave you, I think I’m gonna have to side with analysts on this one… Carnival feels like a buy to me.

Stock.News does not have positions in companies mentioned.