Carnival Corporation — FQ2 FY2026 Earnings Review
HOLD
NYSE: CCL | Record quarter, beat on every line — but the stock fell ~5-6% because the core net-yield outlook was cut and the FY EPS held flat only on buybacks.
FQ2 FY2026 = Quarter ended May 31, 2026 ·
Reported June 23, 2026 BMO ·
Reviewed June 23, 2026 · FYE November 30 · Compared to the June 8 preview
Adjusted EPS
$0.41
vs $0.34 guide/cons · +$0.07 BEAT · +17% YoY
Revenue
$6.66B
Record · +5.3% YoY · ~in-line vs ~$6.68B cons
FY26 Adj EPS Guide
$2.22
Up just $0.01 from $2.21 — on buybacks
Stock Reaction
~-5% to -6%
Sold off on the yield-guide cut
Net Yield Growth (CC)
+2.2%
Beat ~2.0% guide, but +6.4% a year ago — decelerating
Adjusted Net Income
$569M
Record · +21% YoY · vs ~$470M guide
Customer Deposits
$9.0B
All-time high · +$450M YoY
Net Debt / EBITDA
3.1x
From 3.4x at YE2025 — deleveraging on track
Executive Summary
What happened: Carnival delivered a clean, record FQ2 FY2026 — adjusted EPS of
$0.41 beat the $0.34 guide and consensus by $0.07 (+21%), on record revenue of
$6.66B (+5.3% YoY), record adjusted EBITDA of $1.58B, record adjusted net income of
$569M (+21% YoY), and a 12th straight quarter of record net yields. It is the
13th consecutive EPS beat. Management exceeded its own March guidance by ~$100M through commercial
execution and a step-up in cost efficiency, and customer deposits hit an all-time high of $9.0B.
Why the stock fell anyway (the real story): The beat was lower-quality than the
headline. Full-year adjusted EPS was raised only $0.01 to $2.22 — and that increase came
entirely from share repurchases, not operations. The reason: management cut the FY26 net-yield
outlook to ~1.75% reported / ~2.25% normalized constant currency (from ~2.75% in March), citing the
Middle East conflict's drag on European demand (~100 bps gross hit). Structural cost savings (~$0.06/share)
plugged the hole, but the market read a softer demand signal under an unchanged earnings number and sold
the shares off ~5-6%. The forward setup also softened: Q3 adjusted EPS is guided to ~$1.35 vs $1.43 a year
ago — a YoY decline in the seasonally largest quarter.
Bull read: Demand is decelerating off a tough comp, not breaking. The booking curve is the
furthest out on record, 2027 is already booked at historic highs for price and occupancy (European 2027 up
mid-teens %), customer deposits set another record, and the balance sheet keeps healing (net debt/EBITDA
3.1x, EBITDA now guided above $7B). Management deliberately took occupancy down a couple of points in Europe to
protect pricing — a quality-over-volume choice. Costs are structurally lower, and the $2.5B buyback at
~12x P/E is highly accretive.
Bear read: This is the first FY since 2023 where the operational story went the wrong way
— yields cut, EPS held only by financial engineering. Net-yield growth has more than halved from +6.4%
(Q2'25) to +2.2% (Q2'26) and is guided to just ~1.2% in Q3. Fuel is up ~30% YoY with no hedging, the Caribbean
faces multi-year industry capacity growth, and a Q3 EPS guide below last year breaks the beat-and-raise cadence.
Verdict (HOLD): A genuinely strong quarter wrapped around a softer forward demand
signal. The long-term deleveraging-plus-PROPEL story is intact, but with yields decelerating, a tough Q3 comp, and
the stock having already re-rated off the 2023 lows, the risk/reward is balanced. The read-through is the more
important output: watch RCL and NCLH (reporting 4-5 weeks later) for whether the European softness
is Carnival-specific or sector-wide.
This Quarter vs Consensus
| Metric | Guide / Consensus | Q2 2026 Actual | Variance | Verdict |
|---|---|---|---|---|
| Adjusted EPS | $0.34 | $0.41 | +$0.07 (+21%) | BEAT |
| Total Revenue | ~$6.68B | $6.66B | -$17M (-0.3%) | IN-LINE (record) |
| Adjusted Net Income | ~$470M | $569M | +$99M (+21%) | BEAT |
| Adjusted EBITDA | ~$1.48B | $1.58B | +$0.10B | BEAT (record) |
| Net Yield Growth (CC) | ~2.0% | +2.2% | +20 bps | BEAT guide; decel YoY |
| GAAP Diluted EPS | -- | $0.39 | $0.42 PY | Fuel/FX drag in GAAP |
Adjusted EPS up over 15% YoY despite a $0.06 ($73M) unfavorable hit from fuel prices and currency. GAAP net income
$537M (attributable to Carnival). Beat record: 13 consecutive quarters of EPS beats; 12 consecutive quarters of record net yields.
Key Metrics Trends
Quarterly Key Metrics (FQ3 2025 → FQ2 2026)
| Metric | Q2'25 | Q3'25 | Q4'25 | Q1'26 | Q2'26 |
|---|---|---|---|---|---|
| Passenger ticket ($M) | 4,104 | 5,430 | 4,053 | 4,023 | 4,273 |
| Onboard & other ($M) | 2,224 | 2,723 | 2,277 | 2,142 | 2,390 |
| Total Revenue ($M) | 6,328 | 8,153 | 6,330 | 6,165 | 6,663 |
| Revenue YoY % | +9.5% | +3.3% | +6.6% | +6.1% | +5.3% |
| Occupancy % | 104% | 112% | 102% | 103% | 104% |
| Net Yield Growth (CC) | +6.4% | +4.6% | +5.4% | +2.7% | +2.2% |
| Operating Income ($M) | 934 | 2,271 | 735 | 607 | 851 |
| Adj. Net Income ($M) | 470 | 2,000 | 450 | 275 | 569 |
| Adjusted EPS | $0.35 | $1.43 | $0.34 | $0.20 | $0.41 |
| Adj. EPS YoY % | +25% | +13% | +143% | +54% | +17% |
| GAAP Diluted EPS | $0.42 | $1.33 | $0.31 | $0.19 | $0.39 |
Acceleration verdict — DECELERATING on yield, but profitable growth intact. The single most
important trend is the net-yield line: +6.4% → +4.6% → +5.4% → +2.7% → +2.2%.
Part of that is a brutal comp (Carnival lapped the post-COVID pricing recovery), but the last two quarters' step-down
is also the Middle East / European demand hit. Revenue still grew +5.3% and adjusted net income +21% — volume,
cost leverage, and lower interest expense are carrying earnings while pricing growth normalizes.
Annual Key Metrics (FY2021 → FY2026E)
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 | FY26E |
|---|---|---|---|---|---|---|
| Revenue ($M) | 1,908 | 12,168 | 21,593 | 25,021 | 26,622 | ~27.5K |
| Revenue YoY % | -- | +538% | +77% | +15.9% | +6.4% | ~+3% |
| Adj. Net Income ($B) | neg | neg | ~0.0 | 1.9 | 3.1 | ~3.07 |
| Adjusted EPS | neg | neg | ~0.0 | 1.42 | 2.25 | ~2.22 |
| GAAP Diluted EPS | (8.46) | neg | (0.06) | 1.44 | 2.02 | -- |
Quarterly and annual figures sourced from Daloopa (company_id 312); FY2026E reflects company guidance. FY26E revenue is an approximation.
Guidance Deep Dive
Full-Year FY2026 Guidance Walk (March → June)
| Metric | FY25 Actual | Mar Guide | Jun Guide (NEW) | Change & driver |
|---|---|---|---|---|
| Adjusted EPS | $2.25 | $2.21 | ~$2.22 | +$0.01, from buybacks only |
| Adjusted Net Income | $3.1B | ~$3.07B | ~$3.07B | Maintained |
| Adjusted EBITDA | ~$6.6B | ~$7.19B | ~$7.11B (>$7B) | Trimmed slightly |
| Net Yield Growth (CC, normalized) | +5.5% | ~2.75% | ~2.25% | CUT ~50bps — Middle East / Europe |
| Cruise Costs ex-Fuel/ALBD (CC, norm.) | +2.6% | ~3.1% | ~1.3% | IMPROVED — structural saves (~$0.06/sh) |
Mar → Jun bridge: The headline EPS barely moved ($2.21 → $2.22), but the mix shifted in a
way the market disliked. Lower yields (the demand engine) were offset by lower costs
(efficiency) and buybacks (financial). On a quarter where Carnival beat by ~$100M, holding the full
year flat implies management is not flowing the Q2 upside through — a conservative posture consistent
with its track record, but also an acknowledgment that the H2 demand backdrop is softer. Reported (non-normalized)
net-yield guidance is ~1.75% CC.
FQ3 2026 Guidance — the soft spot
| Metric | Q3'25 Actual | Q3'26 Guide | Read |
|---|---|---|---|
| Adjusted EPS | $1.43 | ~$1.35 | -5.6% YoY in the biggest quarter |
| Adjusted EBITDA | ~$3.0B | ~$2.88B | Fuel + yield decel |
| Net Yield Growth (CC) | +4.6% | ~1.2% | Loyalty accounting masks ~2% normalized |
| Cruise Costs ex-Fuel/ALBD (CC) | -- | ~2.8% | Step-up vs Q2's flat |
Management Commentary & Tone
CEO Josh Weinstein leaned into the records — "another quarter of record results, marking
our twelfth consecutive quarter of record net yields and delivering over 20 percent more to the bottom line"
— and framed the yield cut as transitory and conflict-driven rather than structural. He gave a
month-by-month texture on the European softness (March "cardiac arrest" → April better → May worse) and
emphasized that Carnival deliberately reduced occupancy a couple points in Europe to protect pricing
rather than discount. On the demand durability question, management was unambiguous: the booking curve is the
furthest out on record, and 2027 is already booked at historic highs for price and
occupancy, with European 2027 bookings up mid-teens %.
| Theme | What management said |
|---|---|
| Demand / bookings | Booking curve furthest out on record; 2027 at historic highs; European 2027 up mid-teens %; Caribbean demand "relatively stable" with minimal war impact. |
| Yield outlook | Middle East conflict cut FY yield growth ~100bps; expects "record yields in the second half"; views moderation as transitory. |
| Costs | Cruise costs ex-fuel flat YoY in Q2; "hundreds of little things" generating permanent savings; ~$0.06/sh structural saves continuing. |
| Balance sheet | Net debt/EBITDA to 3.1x (from 3.4x YE25); flexibility to "simultaneously invest, reduce leverage, and accelerate shareholder returns." |
| Capital return | $450M+ (17M+ shares) repurchased under $2.5B authorization; "opportunistic," not expecting to deploy the full $2.5B in 2026; "moderate dividend growth" over time. |
Street Q&A — What Analysts Pressed On
| Analyst | Question | Management answer | Quality |
|---|---|---|---|
| Wieczynski (Stifel) | Why cut yields 100bps if 85% booked in March? | Conflict duration underestimated; month-by-month walk (Mar weak → Apr better → May worse); tariff analogy | Well answered |
| Farley (UBS) | Europe vs NA demand split; Celebration Key capacity | NA occupancy advantage unwound more; expects positive Europe yields ahead; 4-ship pier → 13k daily | Partly deflected |
| Boss (JPMorgan) | 2027 booking trends & PROPEL confidence | "No change in confidence"; 2027 at historic highs | Strong reassurance |
| Bowers (Wells Fargo) | Q4 yield shape vs Q3 | Q4 loyalty accounting masks pattern; ~2% normalized | Well answered |
| Chaiken (Mizuho) | Modernization / refurb ROI | "High teens" return hurdles; cabins pay back in years | Clear framework |
| Hardiman/Wagner (Citi) | 2027 cost & yield guide | "Premature"; "many decisions yet to be made" | DEFLECTED |
| Cunningham (Melius) | 1H27 impact from crisis-period bookings | "Early days"; bookings up YoY a positive; "premature" | DEFLECTED |
| Abbenante (Jefferies) | Dividend growth & buyback pace | Moderate dividend increases "rational"; $450M/qtr unsustainable; opportunistic | Clear |
Recurring deflection: management repeatedly declined to quantify any 2027 yield/EPS guidance, calling it "premature."
The 1H27 cost comparability and the exact composition of the yield headwind were also sidestepped.
Contradictions Check
One tension worth flagging (not a hard contradiction): Management characterizes the yield cut as
"transitory" and points to a record 2027 booked position — yet it simultaneously guides Q3 net-yield
growth down to ~1.2% and full-year EPS flat despite a ~$100M Q2 beat. The "transitory + record bookings" narrative
and the "hold the year flat, don't flow the beat through" action are directionally inconsistent: if demand
were as durable as described, the conservative full-year hold reads as either (a) genuine H2 caution, or (b) the usual
sandbagging. Carnival's 13/13 beat history argues for (b), but the burden of proof has shifted after a yield cut.
Otherwise, the prepared remarks, press release, and Q&A are internally consistent.
Indirect Read-Throughs
Macro
Consumer: Underlying leisure-travel demand remains healthy — record deposits, record forward
bookings, stable Caribbean. The weakness is geopolitical, not consumer: the Middle East conflict
specifically depressed European itineraries. Fuel: prices up ~30% YoY, a real margin headwind with no
hedging. FX: a modest drag this quarter ($0.06 combined fuel+FX hit to EPS).
Company / Peer Read-Throughs
| Name | Relationship | Read-through |
|---|---|---|
| Royal Caribbean (RCL) | Closest peer | CCL reports first. Watch whether RCL (more Caribbean-weighted, premium mix) sees the same European softness or holds yields — if RCL holds, the issue is CCL's Europe exposure, not the sector. |
| Norwegian (NCLH) | Peer | Higher Europe/Med exposure than RCL — most likely to corroborate CCL's European demand hit. The cleanest tell on whether this is a Mediterranean problem. |
| Airlines / European travel | Adjacent | CCL's Europe deceleration is an early data point for transatlantic/Med leisure demand into peak summer. |
Catalysts to Watch
| Catalyst | Timing | Why it matters |
|---|---|---|
| RCL / NCLH prints | ~4-5 weeks (late Jul) | Confirms whether European softness is CCL-specific or sector-wide |
| Middle East conflict path | Ongoing | A de-escalation could un-cut the yield guide; management called the hit transitory |
| Fuel (Brent) | Ongoing | No hedging — 10% move ≈ $160M / ~$0.11 EPS |
| FQ3 print & H2 yields | Late Sep | Tests the "record H2 yields" claim against the ~$1.35 EPS guide |
| Deleveraging / rating | Ongoing | 3.1x net debt/EBITDA → path to investment grade unlocks lower rates and bigger returns |
Fundamentals sourced from Daloopa (Carnival Corporation, company_id 312). Results, guidance, and management commentary from Carnival's Q2 FY2026 8-K / press release (June 23, 2026) and the Q2 2026 earnings call transcript. Prepared as a scheduled earnings-review run. Data sourced from Daloopa.