CCL

Carnival's turn from a near-death pandemic balance sheet into a self-funding, deleveraging cash machine is now firmly visible in the FY2025 numbers, and the market is still treating it like a recovery story rather than a recovered one. Revenue grew to $26.6B (+6.4% YoY) on top of a 16% jump the prior year, operating income expanded 25.4% to $4.48B, and net income rose 44.1% to $2.76B — operating leverage finally working as occupancy normalizes against a largely fixed cost base. Critically, operating cash flow of $6.22B comfortably covered $3.61B of capex (down 21.9% YoY), generating real free cash flow that is being directed at the balance sheet: long-term debt fell 7.3% to $24.0B, equity rose 32.8% to $12.3B, and retained earnings more than doubled to $4.82B. ROE of 22.5% on a 16.8% operating margin is doing actual work here.

Valuation is the clincher. At $28.46 the stock trades at 14.1x FY25 diluted EPS of $2.02 and 1.3x sales — well below the multiple typically afforded to a consumer-discretionary franchise compounding earnings in the 40%+ range with improving capital returns. The MD&A's reinstatement of a $0.15 quarterly dividend (record date Feb 13, 2026) is a quiet but real signal: management would not be returning cash if they did not believe the deleveraging glidepath is secure. Combined with $1.93B of cash (+59.3%) and a debt maturity wall that is laddered ($3.07B in 2026, manageable against $6.22B OCF), liquidity risk has moved from acute to ordinary.