Royal Caribbean Cruises Vs. Carnival Corporation: Which C…
As of its December 2025 balance sheet, the debt-to-equity ratio is 2.3x, which means total debt is more than double the company’s equity. The current ratio, which measures a company’s ability to pay short-term obligations with short-term assets, sits at roughly 0.2x. A ratio below 1.0 indicates that short-term liabilities exceed short-term assets, a common situation in this industry. Free cash flow, or the cash left over after paying for operations and equipment, reached $1.2 billion.
The case for Carnival Corporation
Carnival operates as the world’s largest leisure travel company with a portfolio of nine distinct cruise brands including Princess, Holland America, and Cunard. The company manages a global fleet of more than 90 ships that visit over 800 destinations annually. This substantial scale is a primary differentiator among travel and tourism stocks, allowing it to capture diverse customer segments. The company visits over 800 ports, ensuring its brands AIDA and Costa remain household names across diverse continents.
For FY 2025, the company reported revenue of $26.6 billion, a growth rate of 6.4% year over year. Net income for the fiscal year reached close to $2.8 billion, a significant improvement from the previous year when the net margin was 7.7%.
This performance continues a recovery trend from 2023 when the company reported a net loss. The increased revenue is primarily driven by higher passenger ticket prices and increased onboard spending.
Based on its November 2025 balance sheet, the debt-to-equity ratio is 2.3x, indicating that total debt is more than twice the value of holder equity. The current ratio, a measure of how easily a firm can cover its immediate bills, is approximately 0.3x. This reflects a structure where customer deposits often sit on the balance sheet as liabilities until the cruise is completed. Free cash flow for the year was $2.6 billion, providing substantial capital for reinvestment or debt reduction.
Risk profile comparison
Royal Caribbean faces significant risks from cybersecurity threats that could compromise its maritime operations or sensitive guest data. Geopolitical tensions or disease outbreaks can also lead to sudden drops in travel demand or expensive itinerary changes. Furthermore, the company relies on a small number of shipyards for new-build programs and repairs, which can lead to delays or higher costs. Increasing environmental regulations related to carbon emissions also present long term cost pressures for the entire fleet.
Carnival must navigate risks associated with fluctuating fuel prices, which can directly impact its operating expenses. Frequent weather events hurricanes also pose threats to ship safety and scheduled port visits, potentially leading to cancellations. The company competes for vacation spending against other major players Norwegian Cruise Line. Additionally, the company is susceptible to supply chain disruptions and the difficulty of recruiting a large, qualified global workforce.
Valuation comparison
Carnival appears to be the more value-oriented choice as it trades at a lower multiple of future earnings estimates and revenue.
| Metric | Royal Caribbean Cruises | Carnival Corporation & | Sector Benchmark |
|---|---|---|---|
| Forward P/E | 16.1x | 11.8x | 31.2x |
| P/S ratio | 4.3x | 1.5x |
Sector benchmark uses the SPDR XLY sector ETF. Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
Royal Caribbean Cruises and Carnival Corporation are both solid choices to provide investors with exposure to the cruise industry, although they are ly to be more appealing to income-oriented investors given their dividends. As of June 3, Carnival’s dividend yield is 1.1%, while Royal Caribbean sports a higher yield of 1.7%.
Both are seeing rising revenue and produce plenty of free cash flow to pay for their dividends. However, Royal Caribbean stock fell to a 52-week low of $232.10 on May 20 after the company d cruises in the second quarter are exposed to higher risk of impact from global events.
Carnival stock boasts the better valuation. This suggests Royal Caribbean s are pricey in comparison. In fact, Carnival announced a $2.5 billion stock buyback program, indicating it believes its stock is a good value right now.
I both stocks, so I picked up s of each some time ago. For those seeking to pick up s now, Carnival’s lower valuation makes it the better buy.
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About the Author
Robert “Izzy” Izquierdo is a contributing Motley Fool stock market analyst covering information technology, consumer discretionary, consumer staples, and communication services sectors. Prior to The Motley Fool, Izzy was head of product management at Target Media Partners, developing and launching multimillion-dollar software used by businesses such as Charter Communications. Prior to that, he worked at Yahoo! and startups on software products in connected TV, AI, consumer apps, and digital advertising. He holds a bachelor’s degree in English literature from UCLA and is certified in software product management.
Stocks Mentioned
Royal Caribbean Cruises
NYSE: RCL
$286.71
(-0.90%)-$2.59
Motley Fool Stock Advisor’s Latest Pick
—% Avg Return
Carnival Corp.
NYSE: CCL
$27.17
(-1.70%)-$0.47
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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