CCL is a buy; strong bookings and deleveraging drive upside to a fair value of >$43 vs current $26.

Carnival Cruise Line announced quarterly financial results that were better than investors had expected. Furthermore, the management team stated that half of the 2027 capacity has already been sold, and looking ahead to 2028, this year has also started off great, with occupancy rates and prices higher than the company had anticipated.

So, things have been great for Carnival Cruise Line since the economic reopening, as people make up for lost travel time during the pandemic lockdowns.

Of course, this was one of the reasons that led me to highlight this stock as an excellent buying opportunity. Therefore , I am pleased to see Carnival exceeding expectations and the stock price rising .

But although I still believe it is a buying opportunity, I wanted to reassess the business, consider these recent results, and compare them to the valuation to determine whether it was too late to add this excellent business to your investment portfolio.

So , you can see the announced figures for the third quarter versus what the management team had anticipated. The company exceeded expectations in almost every important metric, including revenue, adjusted EBITDA, net income, and earnings per share.

The driving force behind this growth is largely to compensate people for lost travel time. They are willing to pay higher prices because available spaces are limited and because companies have raised prices.

Therefore, Carnival is experiencing higher onboard spending, record occupancy rates, and customer deposits for future travel periods up by about 7% compared to the third quarter of last year.

Therefore, these results gave the management team the confidence to raise their profit margins and earnings forecasts for the full year , even though they are paying much higher fuel prices, which has been a major disadvantage for Carnival.

They then projected net returns to rise by a benchmark 2.7%, compared to 2.25% just 3 months prior. Half of 2027 is already booked , and the number of bookings, i.e., occupancy rates, and price per occupancy are higher than ever.

In addition, 2028 started off excellently again with higher than expected occupancy rates and higher prices than ever before. The management team has been increasing prices approximately every 3 or 6 months, and prices are constantly rising while customers continue to pay.

Now, what I found interesting about Carnival is what they do with their cash flow. They have many opportunities . One of the things they do is buy back a lot of shares , worth $1.2 billion since the beginning of the year, and 45 million shares in 2026 they bought back.

What they also did was pay off a large portion of the debts. It is worth noting that the company was forced to halt its operations during the lockdown phases of the pandemic. They were losing billions of dollars. They needed to borrow out of desperation.

Therefore, because of the lenders' fear of the risks of lending to a company that was completely out of business, they demanded much higher than usual interest rates to lend to Carnival Cruise.

At that time, before the pandemic hit, Carnival had about $10 billion in debt. During the pandemic, Carnival added another $20 billion in debt, bringing its total debt to approximately $30 billion.

This additional $20 billion in debt that they added during the pandemic was driven by desperation. Therefore, extremely high interest rates were imposed on them .

Now that they are generating large cash flows, they are using part of it to repurchase shares and another part to pay off debts. They have already paid off nearly five billion dollars or more of high-interest debt, and I believe management will continue to do so as we progress and they achieve more liquidity,

so I have updated my estimate of Carnival's fair value. I calculated a fair value of over $43. The current market price is $26. So, I still see great upside potential here for Carnival Cruise Line.

I have stated that I have rated this stock as a buy opportunity, and today, after evaluating the company’s quarterly financial results, I reaffirm this rating.