MIAMI – Carnival (NYSE:) Corporation, the world's largest cruise company, announced the expansion of its fleet with the order of three liquefied petroleum gas (LNG) vessels, scheduled for delivery in the summers of 2029, 2031, and 2033. The move will strengthen the company's Carnival Cruise Line brand, which has seen strong consumer demand for cruise vacations.
The deal with Italian shipbuilder Fincantieri will see the construction of a new class of ships, each boasting around 230,000 registered tonnes. Once delivered, these vessels will take Carnival's LNG-powered fleet to a total of 16 vessels.
Christine Duffy, president of Carnival Cruise Line, emphasized the company's commitment to innovation and creating exciting experiences for future guests. With more than 3,000 guest rooms, the new ships will be among Carnival Corporation's largest ships in the world, capable of carrying approximately 8,000 guests at full capacity.
The addition of these ships is part of Carnival's strategy to improve the composition of its global product portfolio and increase visitor capacity. The strategy includes transferring a total of five ships from sister brands to Carnival Cruise Line ships between 2023 and March 2025.
Carnival Corporation's CEO, Josh Weinstein, said the company is focused on growing its top-grossing brand, Carnival Cruise Line, to meet strong market demand. The new construction pipeline, according to Weinstein, shows a systematic growth pattern, with an estimated capacity increase of 1.5% per year between 2025 and 2033.
The new ships will not only be larger fleets but will also incorporate improved energy efficiency, waste management, and pollution reduction technologies. These features are consistent with Carnival Corporation's commitment to reducing its environmental footprint and achieving rapid reductions in greenhouse gas emissions.
Pierroberto Folgiero, CEO of Fincantieri, expressed pride in the partnership and the importance of building the largest ship ever built by a shipbuilder and in Italy.
Design details and cruise information for the new ships will be released in the future. The order is subject to funding, which is expected to be finalized later this year. This expansion is based on a press release from Carnival Corporation.
In other recent news, Carnival Corporation has made major advances in the tourism industry. The company recently reported record Q2 earnings, exceeding its guidance with an operating profit of more than $170 million, driven by a 12% increase in yield. This resulted in record revenue, operating income, and all-time highs in customer deposits and booking rates.
Truist Securities, Argus Research, and Macquarie all maintained their positive ratings on Carnival Corporation and raised their price targets, reflecting confidence in the company's strong demand and extended booking curve.
The company is also in the process of integrating brand strategies, with plans to sunset P&O Cruises Australia and merge it with Carnival Cruise Line. In addition, Carnival Corporation is developing a new destination, Celebration Key, which is expected to launch in 2025, which is expected to contribute to revenue and fuel efficiency. The company is actively working to achieve its 2026 SEA Change sustainability goals and reduce debt and interest costs to strengthen its capital structure.
These are the latest developments that show Carnival Corporation's continued growth and improved profits. The company's outlook remains positive, with 8% yield guidance for Q3 and full-year revenue guidance improved by $275 million due to yield growth and cost savings.
InvestingPro Insights
As Carnival Corporation prepares for its ambitious fleet expansion, the latest data from InvestingPro provides a snapshot of the company's financial health and market conditions. With a strong market capitalization of $24.34 billion, Carnival plays a major role in the hotel, restaurant and leisure industry.
InvestingPro Tips highlights that Carnival's revenue is expected to grow this year, which is a promising sign for investors looking at the company's future profitability. Additionally, 14 analysts have revised their earnings upward in the future, suggesting a positive outlook on the company's financial performance.
From a valuation perspective, Carnival trades at a low P/E ratio relative to its near-term earnings growth, with a current P/E ratio of 23.54 and an adjusted P/E ratio for the trailing twelve months from Q2 2024 of 22.46 . This may indicate that the stock is undervalued given its growth potential.
InvestingPro Data also shows strong revenue growth of 34.02% in the last twelve months from Q2 2024, reflecting the company's successful efforts to increase visitor volume and expand its product portfolio. The gross profit margin stands at 51.17%, indicating good performance and strong profitability.
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