3 Reasons to Buy Carnival Stock Like There's No Tomorrow

Government restrictions during the COVID-19 pandemic inflicted a lot of financial damage to many travel-related es, including cruise ship operator Carnival (CCL 1

But after years of rebuilding, the company finally got its groove back

There are many reasons to consider an investment in Carnival stock

Here's a look at three factors that make the cruise company a compelling long-term investment

Image source: Getty Images

In fact, the company's revenue has been on an upswing since the worst of the pandemic passed and is now higher than pre-pandemic levels

Strong customer demand enabled Carnival to raise ticket prices, driving revenue higher

But how long can this robust demand continue

After all, the impact of the Trump administration's constantly changing tariff policies casts a cloud of uncertainty over how consumers may adjust their spending

The answer is that demand could increase for years

The rise in cruise travelers vides a tailwind to Carnival's ability to maintain sales growth

Carnival's strengthening financials Higher sales isn't the only boon to Carnival's

Part of the company's net income growth is attributed to its recovery efforts ing the financial challenges incurred during the pandemic

CFO David Bernstein stated, "We continued rebuilding an investment grade balance sheet, working aggressively to reduce interest expense, simplify our capital structure and manage our future debt maturities. " The company's efforts can be seen in the story of its long-term debt

The lower outstanding balance means reduced debt costs, such as a drop in interest payment amounts, which contributed to Carnival's bottom-line imvement

The firm still has a lot of debt on its balance sheet, but it's showing that it is working to get that debt under control

Carnival's compelling valuation Carnival's -price valuation is another appealing investment factor

To assess this, let's examine its price-to-earnings (P/E) ratio, which tells you how much investors are willing to pay for a dollar's worth of a company's earnings based on the trailing 12 months, and compare it against rival Royal Caribbean Cruises

Carnival's P/E multiple is not only lower than Royal Caribbean's, it has dropped significantly from a year ago

This indicates Carnival s are a better value now than it was last year when its P/E ratio far exceeded its competitor's

With a combination of strong sales, decreasing debt, and attractive stock valuation, Carnival has the potential to see its price rise over time

Adding to this is the continued resilience in customer demand for cruise getaways

For investors with an eye toward the long term, these factors make Carnival stock one to buy and hold

Robert Izquierdo has positions in Carnival Corp

And Royal Caribbean Cruises

The Motley Fool recommends Carnival Corp

The Motley Fool has a disclosure policy.