I Predicted That Carnival Stock Would Beat the Market in 2025. Can It Repeat in 2026?

Carnival Corp. (NYSE: CCL) stock beat the S&P 500 last year, although not by a wide margin; 23% to 18%. I anticipated this market beat for a number of reasons. The company had a lot to gain from shrinking interest rates, it had been reporting record sales, profits were increasing, and the stock price was low.

Although the stock did come out on top of the market, investors have still been cautious with it. The company still has high debt, and it isn't clear that it can continue to sustain record demand. With that in mind, can Carnival beat the market again this year?

Image source: Carnival.

Records on top of records

Carnival set new records throughout 2025, and it ended the full year with record revenue, net yields, operating income, customer deposits, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

It reported a strong fourth fiscal quarter (ended Nov. 30), outperforming guidance across metrics, and it's well positioned for a strong 2026. It's guiding for increased profitability, and 2026 bookings and occupancy are at historical highs, with two-thirds of its booked position already on the books.

Carnival also acquired several important new assets, including a new Princess-branded cruise ship and its new Celebration Key and RelaxAway resorts.

Lowering the debt

While the market appreciated the fourth-quarter report, and the stock jumped after earnings, there's still a high debt that's holding it back. Carnival took on a huge debt to stay solvent during the pandemic, and several years later, that debt is still a mountain. The company has been paying it off responsibly, but could still take a number of years to finish paying it down to normal historical levels.

Lower interest rates have played in its favor, and in 2025, Carnival refinanced $19 billion in debt. It's now $10 billion off of its 2023 peak, and if interest rates continue to go down, the company will be in an even better position to save on interest and pay the debt down quicker.

Too cheap to ignore?

Carnival stock trades at a forward one-year P/E ratio of less than 11, which is dirt cheap. If it had poor future opportunities, it would be a value trap. But it remains the cruise industry leader, with record revenue and high profits, and management is carefully paying off the debt. It also recently restarted its dividend, which is a vote of confidence by management. That makes it look like an opportunity.

If interest rates keep going down, I can envision Carnival beating the market again this year, and I think it can add value to a diversified portfolio.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.