Key Points

• Carnival is positioning itself to generate much more revenue in 2030.

• Higher earnings and lower debt levels indicate a business on better financial footing.

• The stock’s current valuation helps to stack the odds in investors’ favor.

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The COVID-19 pandemic was a boon for certain businesses. However, it also dealt a devastating blow to others. Carnival (NYSE: CCL) fell into the latter camp, as its operations were halted temporarily as a safety measure.

Things have improved drastically, though. In the past three years, shares of Carnival have rocketed 158% higher (as of Dec. 3). The market has generally been more bullish on the company, even though this travel stock is 20% below its 52-week high.

Where will Carnival be in five years?

The growth should continue

During the fiscal 2025 third quarter (ended Aug. 31), Carnival's revenue increased 3% year over year to $8.2 billion. Compared to three years ago, the figure almost doubled. The business is now posting record sales, customer deposits, and net yields (a measure of pricing power), all clearly encouraging signs.

Investors should expect Carnival's top line to continue expanding over the decade, even though the pace will moderate from the bounce-back period since the pandemic. The cruise industry currently represents only a tiny fraction of the overall travel market. Younger customers, as well as first-time cruise travelers, are interested. And these cruise trips are generally more cost efficient than land-based alternatives.

Carnival is looking to capture more demand in the future. It's expanding its fleet, with plans to introduce one to two new ships per year. And it's pushing aggressively into places like Australia and New Zealand. This should allow the company to serve more customers, which supports more revenue over time. Consequently, there's a high likelihood that the business will be larger in 2030.

Carnival's finances are improving

During the worst days of the pandemic, Carnival was in major financial trouble. With operations halted, revenue took a hit, which led to mounting losses. The net loss came in at an alarming $10.2 billion in fiscal 2020. The company had to take on more debt to stay afloat. It's no wonder the stock was under pressure.

But the situation is much better these days. And Carnival's financial picture is improving. Its net income totaled $2.4 billion in the last three quarters. Rising profits are obviously something that shareholders want to see. Wall Street consensus analyst estimates predict that earning per share will increase at a compound annual rate of 13.2% between fiscal 2025 and fiscal 2027. Double-digit growth could continue after this forecast period.