Carnival (NYSE: CCL) (NYSE: CUK) has gone through its worst and best times in recent years. The world's biggest cruise operator saw revenue plunge during early pandemic days as it was forced to halt sailings, and this led to annual losses and increasing debt. But as Carnival set sail once again, it made major moves to turn things around -- from introducing more fuel-efficient ships to inspiring travelers to spend more on board -- and those efforts have been paying off.
The company has returned to profitability and may be heading for its best days ever in the quarters and years to come. There are many reasons to buy Carnival like there's no tomorrow, but let's consider the three biggest.
1. An impressive recovery and growth story
As mentioned, Carnival experienced turbulent times just a few years ago. But the company made efforts to turn things around, and the plan worked, as we can see through recent earnings reports. Carnival has reached many records, including the following in the latest reporting period: record adjusted net income of $3.1 billion for the full year 2025, record revenue of more than $26 billion, and record high operating income of $4.5 billion.
Carnival also expects adjusted net income for the coming year to surpass that of 2025. And there's reason to be optimistic about Carnival reaching its goals as booking trends show travelers are flocking to the company's cruises, even at higher price levels. For example, the 2026 cumulative advanced booked position is in line with that of this year, and in the latest quarter, the company reported record customer deposits.
2. Solid work on paying down debt
As I noted earlier, Carnival built up a wall of debt to stay afloat (excuse the pun) during the early stages of the coronavirus crisis. But the company made paying down this debt and returning to investment grade credit ratings a priority. Carnival also wisely focused on paying down variable rate debt, making it less vulnerable to any potential higher interest rate environment.
The company said during the recent quarterly report that it's cut its debt by more than $10 billion since the peak about three years ago. With a net debt to adjusted EBITDA ratio of 3.4x for the current year, Carnival reached investment grade with Fitch Ratings and is one step away from investment grade at S&P. (S&P recently lifted its view on Carnival to "positive" from "stable.")