The Pros And Cons Of Investing In Cruise Stocks Right Now

All 13 of the major analysts putting out profit targets see Carnival returning to profitability in the current fiscal third quarter that ends this month. Cruise line companies are seeing a strong rebound after years of COVID-related setbacks, with passenger booking rates up industry-wide. Still, just one stock—Royal Caribbean Group—has outperformed the broader market in the last year. Cruise companies are constantly remodeling and upgrading ships to keep up with shifting consumer trends, too.

  • You might be among those with an upcoming cruise booked on one of Carnival’s brands.
  • The company expected the figure to reach 100% or more by the end of 2022.
  • The main competitive advantage that Lindblad enjoys is its ability to offer premium, one-of-a-kind experiences.
  • While Carnival’s business was quite heavily impacted due to the COVID-19 pandemic in 2020, it had revenues of nearly $6 billion over the year.
  • Norwegian offers what it calls “freestyle cruising,” meaning its cruises have no dress codes, no set dining times, and no assigned seating.

Below, we look at the top three cruise line stocks with the best value, fastest growth, and best performance. The cruise line industry is part of the broader travel and tourism industry, focused primarily how to read candles on providing sea-based vacation experiences. Companies in the industry own and operate cruise ships in various destinations worldwide, offering a variety of itineraries and themed cruises.

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You can buy at market price, or place a limit order that lets you dictate the maximum or minimum price at which you’re willing to buy or sell. In the grand scheme of the market, CCL stock is fairly reasonably priced. But if you’d like to buy a fractional share, you have the option to do so with a brokerage account that supports fractional shares.

  • Buoying hopes are the resumption of sailing in Singapore onboard its Quantum of the Seas ship, and plans to get its broader operations up and running by July 1.
  • Unvaccinated guests must present a negative PCR COVID-19 test taken between 24 and 72 hours prior to embarkation in addition to taking an antigen test at embarkation and again within 24 hours of debarkation.
  • The Russell 1000 benchmark figure above is as of May 29, while all other data throughout are as of May 23.

The company’s direct competitors include Royal Caribbean Group (RCL), Norwegian Cruise Line Holdings Ltd. (NCLH), and Lindblad Expeditions Holdings Inc. (LIND). It also faces competition from the broader travel and tourism industry, including resorts, casinos, and theme parks. For FY 2021, ended Nov. 30, 2021, Carnival reported a net loss of $9.5 billion on revenue of $1.9 billion. Nevertheless, cruise lines tend to have a passionate customer base with plenty of repeat passengers. Over the long term, cruise line stocks may be a good value investment provided you are comfortable with some volatility.

Travelers with Lindblad can book exciting expeditions all over the world, including to Antarctica, the Caribbean coast, and Patagonia. Because of the types of trips offered, Lindblad has built a loyal base of wealthy customers. The cruise line has implemented some of the strictest measures to avoid COVID-19 outbreaks as its cruises resume service. It has a 100% vaccination policy that it extended indefinitely in November 2021.

An investment in this niche starts with the assumption that these numbers will continue climbing over the long term even if recessions briefly send them lower. Considering how much the pandemic continues to affect cruise lines, investing in them is relatively risky. The cruise line business has high operating costs, and many cruise companies have lost a lot of money.

The cruise industry consists of all business entities involved with tourism and transport on cruise ships. Cruise industry operations include cruise lines, cruise ship manufacturers and entertainment companies that specialize in cruise ship entertainment. However, the company is righting the ship by reducing its debt and improving profitability. Cruise lines will continue to debut new ships in the near term through a balancing act between refinancing debt and improving profit margins. Its net loss per share shrank by 39% since last year, and improved by 60% from 2020.

CCL Stock

Royal Caribbean booked a record $8.8 billion in revenue in 2017, up 3% from the prior year. Profits also set a new high mark, too, jumping 24% to $1.63 billion, as return on invested capital crossed 10% of sales from 5% a few years earlier. The second-place cruiser Royal Caribbean operates 50 ships through its Royal Caribbean, Celebrity, and Azamara Club brands. It services many of the same destinations and home ports as Carnival, and its biggest terminal is in Miami, Florida. Like Carnival, Royal Caribbean shares plunged during the COVID bear market.

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Facing significant backlash and pressure to address carbon footprints, cruise lines will likely take on even heftier costs to reduce food waste and implement additional sustainability measures. Some are unwilling to give up new-build pipelines, but all are reevaluating operational structures and strategic priorities to sail back to profitable growth. The three major cruise lines, with $74 billion of debt combined, according to Bloomberg, face incoming competition from billionaires and hotels hoping to start their own fleets. Betting on the luxury tier and existing customer loyalty bases, these new entrants will be vying for a chunk of the premium market.

While profits plateaued in 2019, they steadily grew in the years before then and had more than doubled their total from 2013. With the company working hard to improve earnings while growing its fleet, it could eventually set a new profitability record. The company’s world-class and steadily improving fleet puts it in a strong position to derivatives essentials capitalize on robust and growing demand for cruising. Before the pandemic, global ocean cruise passengers had grown at a 5.5% compound annual rate from 2003 through 2019. The industry had gotten back on a growth trajectory in 2023, with Carnival reporting all-time highs in bookings and customer deposits in the year’s second quarter.

Cruise lines are increasingly snatching up private islands and beaches as port cities become miserably overcrowded

With as much knowledge as possible about the cruise ship industry and how well the cruise lines are positioned, well-educated investors have a leg up over other investors. However, it reported better-than-expected earnings in the third quarter of 2022, and other metrics are improving as well. “Load factors,” a measure of the number of booked passengers compared to the number needed to break even on a sailing, reached 96% overall and surpassed 100% on Caribbean sailings, according to a press release.

The company began as Carnival Cruise Line, formed in 1972 by Ted Arison. It made an initial public offering (IPO) of 20% of its common stock in 1987. Carnival Corp. was incorporated in Panama in 1974, while Carnival plc was incorporated in England and Wales in 2000.

Carnival Corporation (CCL)

All three management teams have predicted another record operating year in 2019. Whether cruise giants bounce back quickly depends on where global growth rates end up, compared to the expansion rate of industry capacity. Fuel costs make up a significant portion of a cruise trip’s overall cost, and that fact means cruise companies are susceptible to big swings in fuel prices, just as airlines are. A sustained surge in the cost of oil will crimp profitability in the short term, at least until the company can offset it over time through rising ticket prices.

It’s taken a long time for the cruising industry to start up again in this country. Now Carnival, Royal Caribbean, and Norwegian are facing another wave of passenger cancellations and a potentially longer itinerary on the way to eventual profitability. When deciding if you should purchase Carnival stock, it’s always a good idea to first assess your financial situation macro economic analysis and long-term savings goals. Carnival is a widely recognized company in the travel space, but its stock is still susceptible to volatility. What it comes down to is if you can handle the risk that comes along with a stock like Carnival’s. Norwegian Cruise Line Holdings (NCLH -2.71%) is a hit among casual cruisers and is known for its laid-back atmosphere.

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