CCL vs. NCLH: Which Cruise Stock is the Better Buy Now?

Globe and Mail

4 days ago

Cruise operators are navigating a strong wave of consumer demand, with occupancy, onboard spending, and forward bookings all trending higher. In this environment, Carnival Corporation & plc CCL and Norwegian Cruise Line Holdings Ltd. NCLH are leveraging sharply different strategies to capture market share and deliver shareholder value. While both are seeing top-line growth, differences in scale, cost discipline and financial flexibility are beginning to set them apart.
For investors seeking exposure to the cruise sector's cyclical upside and structural transformation, the key question is: Which of these travel stocks offers a more compelling risk-reward profile right now? Let's break down the fundamentals, growth outlook, and valuation to determine the better buy.
The Case for CCL
Carnival is building structural momentum through a combination of fleet rationalization, capacity reallocation, and margin-focused initiatives. The company has significantly reshaped its operating model by retiring older, high-cost ships and deploying newer, more efficient vessels to high-demand regions such as the Caribbean, Alaska and Europe. These strategic shifts are improving unit economics and reducing long-term maintenance and dry dock costs, helping to stabilize margins across its global portfolio.
At the commercial level, Carnival is leveraging its multi-brand architecture to target a diverse and segmented customer base. With a brand lineup that includes Carnival Cruise Line, Princess Cruises, Holland America Line and AIDA, the company is able to differentiate pricing, itineraries, and onboard experiences to cater to a broad spectrum of guests. This segmentation strategy supports pricing flexibility, mitigates geographic and demographic risk, and enhances revenue resilience during volatile periods.
The company is also strengthening its digital and loyalty infrastructure to improve commercial efficiency and guest retention. Enhanced mobile apps, pre-cruise booking platforms, and onboard commerce tools are streamlining trip planning while increasing ancillary revenue per passenger. Additionally, Carnival Rewards — a new loyalty program expected to roll out in 2026 — will link cruise perks to total spend and credit card use, positioning Carnival to capture greater wallet share and drive higher repeat rates.
Operationally, Carnival continues to benefit from its global scale and centralized sourcing model. With a minimal newbuild pipeline through 2029 and a growing focus on return on invested capital, the company is entering a phase of structurally higher free cash flow generation. These efforts collectively support Carnival's goal of regaining investment-grade credit status while delivering durable, long-term value to shareholders.
The Case for NCLH
Norwegian Cruise continues to focus on its premium-priced, lower-capacity model targeting affluent guests. The company is executing on its strategy of disciplined capacity growth, innovative ship design and destination-rich itineraries.
With the upcoming expansion of its Prima-class fleet, Norwegian Cruise is aiming to enhance onboard experiences and strengthen its brand positioning. The company is also making strides in technology, loyalty integration, and targeted promotions to drive yield improvement.
However, Norwegian Cruise faces persistent margin pressure due to elevated dry dock expenses, inflationary costs, and fuel price volatility. These pressures may constrain near-term profitability despite robust pricing trends.
While long-term prospects remain promising, cost control and deleveraging remain key watchpoints. Norwegian Cruise's net leverage remains elevated, which could limit financial flexibility in the near term.
How Does Zacks Consensus Estimate Compare for CCL & NCLH?
The Zacks Consensus Estimate for Carnival's fiscal 2025 sales and EPS suggests year-over-year increases of 5.8% and 40.9%, respectively. In the past 60 days, earnings estimates for fiscal 2025 have risen 8.1%.
CCL Earnings Estimate Trend
The Zacks Consensus Estimate for Norwegian Cruise's 2025 sales and EPS suggests year-over-year increases of 6.2% and 10.4%, respectively. In the past 60 days, earnings estimates for 2025 have declined 1%.
NCLH Earnings Estimate Trend
Price Performance & Valuation of CCL & NCLH
Carnival stock has rallied 59% in the past three months, significantly outpacing its industry and the S&P 500's rise of 29.4% and 15.1%, respectively. Meanwhile, Norwegian Cruise shares have risen 37% in the same time.
CCL & NCLH Stock Three-Month Price Performance
Image Source: Zacks Investment Research
Carnival is trading at a forward 12-month price-to-earnings (P/E) ratio of 13.63X, below the industry average of 20.26X over the last year. NCLH's forward 12-month P/E multiple sits at 10.61X over the same time frame.
End Notes
Carnival emerges as the more compelling choice over Norwegian Cruise at this stage, backed by its broader brand reach, improving operating leverage, and strategic focus on margin enhancement. The company's disciplined approach — marked by fleet optimization, digital innovation, and multi-brand diversification — is driving structural improvements across its global portfolio.
Carnival's stronger earnings momentum, upward estimate revisions, and a visible path toward investment-grade credit restoration reinforce its position as a more stable and scalable cruise operator. While Norwegian offers an appealing premium product and long-term brand value, its elevated leverage, ongoing margin pressures, and softer earnings revisions limit its near-term attractiveness.
With a more favorable trajectory on both operational and financial fronts, Carnival appears better positioned to deliver sustainable value in the ongoing cruise recovery cycle.
CCL currently sports a Zacks Rank #1 (Strong Buy), whereas NCLH carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks here.
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