Shares of Carnival (CCL) have been strong performers lately, with the stock up 5.1% over the past month. The stock hit a new 52-week high of $31.38 in the previous session. Carnival has gained 25.4% since the start of the year compared to the 11.5% move for the Zacks Consumer Discretionary sector and the 10.5% return for the Zacks Leisure and Recreation Services industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on June 24, 2025, Carnival reported EPS of $0.35 versus consensus estimate of $0.24 while it beat the consensus revenue estimate by 1.97%.
For the current fiscal year, Carnival is expected to post earnings of $2 per share on $26.49 in revenues. This represents a 40.85% change in EPS on a 5.86% change in revenues. For the next fiscal year, the company is expected to earn $2.28 per share on $27.44 in revenues. This represents a year-over-year change of 13.81% and 3.59%, respectively.
Valuation Metrics
Though Carnival has recently hit a 52-week high, what is next for Carnival? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). The individual style scores for Value, Growth, Momentum and the combined VGM Score run from A through F. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Carnival has a Value Score of A. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 15.6X current fiscal year EPS estimates, which is not in-line with the peer industry average of 22.1X. On a trailing cash flow basis, the stock currently trades at 7.9X versus its peer group's average of 8.1X. Additionally, the stock has a PEG ratio of 0.7. This is good enough to put the company in the top echelon of all stocks we cover from a value perspective, making Carnival an interesting choice for value investors.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this is even more important than the company's VGM Score. Fortunately, Carnival currently has a Zacks Rank of #2 (Buy) thanks to a solid earnings estimate revision trend.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Carnival fits the bill. Thus, it seems as though Carnival shares could have potential in the weeks and months to come.
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Carnival Corporation (CCL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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