Investigating Which Cruise Line Stock Offers the Most Profitable Investment Opportunity
Carnival Outperforms Royal Caribbean as a Long-Term Investment
In the competitive world of cruise line operators, Carnival is currently offering better value for a long-term investment compared to Royal Caribbean, according to recent financial performance, growth strategies, and market valuation indicators.
Carnival's fiscal 2025 earnings per share (EPS) estimate was recently revised upward from $1.88 to $2.00. The company delivered record results in Q2 2025, with yields up 6.5% year-over-year, EBITDA margins at their highest in nearly two decades, and unit costs better than guidance by 200 basis points. Net debt-to-EBITDA improved to 3.7, showing strong balance sheet discipline.
On the other hand, Royal Caribbean raised 2025 adjusted EPS guidance to $15.41-$15.55 based on strong first-half performance. Total revenue grew 10.4% year-over-year but slightly missed analyst revenue estimates. Despite solid bookings and onboard spending, revenue growth lags slightly with some recent stock price weakness.
Carnival is expanding its destination portfolio aggressively, including its 'Paradise Collection'—premium and differentiated destinations like Celebration Key and enhancements at various private islands—to attract repeat and new guests. Marketing investments have increased website traffic by 60% in five years, helping capture market share.
Royal Caribbean is capitalizing on new ship launches (Star of the Seas and Celebrity Xcel) and destination experiences like Royal Beach Club Paradise Island. They emphasize premium experiences and digital channel growth to sustain bookings, with demand spread across all brands and itineraries.
Carnival’s stock gained 34% in three months and 21% year-to-date, showing strong relative strength versus the S&P 500. The company consistently beats earnings expectations, with 11 consecutive positive EPS surprises and average beats of 169.85% over the past year. Current bullish technical indicators point to continued momentum.
Royal Caribbean’s stock recently dropped 5.3% due to revenue shortfalls against analyst expectations despite strong demand. Bookings remain solid but some cautious sentiment is reflected in recent price weakness.
In summary, Carnival demonstrates stronger recent earnings upgrades, higher profitability margins, effective cost controls, and a clear expansion into unique destination offerings supporting recurring demand. Its stock shows strong momentum and consistent beats of expectations. Royal Caribbean remains a robust player with premium products and new builds fueling growth but faces more revenue growth pressure and recent stock price pullbacks.
For a long-term investment focusing on value and growth sustainability given current data, Carnival appears better positioned to deliver sustained shareholder value at this time.
[1] Seeking Alpha: Carnival Corporation Earnings Preview: Q2 2025 [2] Seeking Alpha: Royal Caribbean Cruises Ltd. Earnings Preview: Q2 2025 [3] Yahoo Finance: Royal Caribbean Cruises Ltd. (RCL) Q2 2025 Earnings Call Transcript [4] Yahoo Finance: Royal Caribbean Cruises Ltd. (RCL) Q2 2025 Earnings Release [5] Yahoo Finance: Carnival Corporation & plc (CCL) Q2 2025 Earnings Call Transcript [5] Yahoo Finance: Carnival Corporation & plc (CCL) Q2 2025 Earnings Release
- Given the current financial performance and growth strategies, investing in Carnival over the long term seems to offer a better return on finance compared to Royal Caribbean.
- Carnival's fiscal 2025 earnings per share (EPS) estimate was recently revised upward, and the company's stock has gained significant momentum, showing consistent beats of expectations.
- While Royal Caribbean also boasts promising growth strategies, such as new ship launches and destination experiences, its stock price has recently experienced a pullback due to revenue shortfalls.
- In terms of lifestyle and technology, Carnival is investing in unique destination offerings and digital channel growth to attract and retain customers, contributing to its strong market valuation.
