What Changed In Carnival’s Story?

Carnival Corporation (CCL) stock is priced at 11.6 times earnings, against 22.5 for the S&P 500. Even at that valuation, investors must watch how the cruise operator uses its cash. Executive priorities are shifting. During the fiscal Q4 2024 call, management stressed paying down debt to rebuild the company’s finances. Now it emphasizes something else. So what is it?

Carnival Now Talks Up Buying Back Its Shares

Management is now making the case for buying back Carnival’s stock. During the fiscal Q3 2026 call, executives noted that just six months into its share repurchase program, the company had already bought back about $1.2 billion of stock.

During the fiscal Q4 2024 call, management framed paying down debt as a way to transfer value from lenders back to shareholders. The messaging evolved. By the fiscal Q3 2025 call, the company stated that “debt reduction no longer has to be priority one, two, and three.”

Management remains focused on rewarding shareholders. Previously, executives planned to do so through debt reduction. Today, they talk up buying back stock, though Carnival did use cash on hand to redeem $500 million of notes during fiscal Q3 2026.

Has Carnival Paid Down Enough Debt?

Carnival has retired enough obligations to earn investment-grade ratings, but its debt load remains substantial. Total debt sits below $24 billion, compared to a peak of $36 billion in 2023, management noted on the fiscal Q3 2026 call. That represents a decline of about a third.

During fiscal Q3 2026, S&P became the second rating agency to grant Carnival an investment-grade rating. Following that upgrade, the company no longer holds any secured debt, which is debt backed by pledged assets.

Yet that debt is still large relative to the overall value of the business. Carnival’s debt currently equals 69.1% of its market value, against 20.1% for the S&P 500.

How Big Are Carnival’s Buybacks Next To Its Cash?

The company generated $6.8 billion of cash from operations over the past twelve months. Looking ahead, Carnival expects its buybacks and dividend to total nearly $2 billion for fiscal 2026.

The physical fleet also requires a portion of that cash. Capital spending outside of new ship construction is $2.4 billion for 2026, and management expects that figure to climb somewhat higher over the next few years.

Meanwhile, Carnival’s sales growth has slowed. Sales over the past twelve months were 5.2% higher than a year earlier, compared to growth of 7.1% at the same point a year before. Management forecasts capacity growth of just 0.5% in 2027, meaning more sales would have to come from each ship earning more rather than from more ships.

Should Carnival Investors Worry About Buybacks Over Debt?

Mostly no: the shift toward buybacks appears more reassuring than concerning. Carnival is repurchasing stock while its debt sits well below the 2023 peak and no secured debt remains. Market demand also looks firm. Management noted that 2027 is already half booked, with occupancy and pricing at record levels.

Carnival’s low price against earnings ignores its debt, and management has stated that reducing that debt no longer has to come first. Ultimately, buybacks and debt repayment draw on the same cash from a business whose sales growth has slowed.

Carnival has continued paying down debt while buying back stock, yet the debt remains large compared to its market value. That makes Carnival’s total debt the number to watch in the company’s fiscal Q4 2026 report.

Does This Mean You Should Act On CCL?

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