Carnival (CCL -0.90%) (CUK -0.82%) stock was once the prototypical value stock that beat the market and paid an attractive dividend. In a cautionary tale for investors, the company was dealt a huge blow during the pandemic, and it's still clawing its way back.

Performance-wise, the company is doing amazing. Revenue has exceeded prepandemic numbers and continues to increase, and demand is incredibly strong. The stock had been reflecting that until recently, when it fell again in the tariff-induced sell-off.

But there's one reason to expect Carnival stock to soar over the next five years.

There's only one thing missing right now

Carnival's revenue is at all-time highs, and profitability continues to improve. Net income adjusted for a one-time charge related to debt extinguishment was $174 million in the 2025 fiscal first quarter (ended Feb. 28), beating guidance.

Demand remains extremely robust. It continues to book out on its longest-ever curve, tickets are at high prices, and onboard spending is strong.

So what's been holding investors back? Carnival took on debt to remain operational when cruises were off in 2020. Five years later, the debt is still weighing on its books. Although Carnival has been paying it off incrementally and efficiently, the debt balance remains very high at $27 billion as of the end of the first quarter.

But as interest rates come down, it's been able to negotiate better terms on the remainder, and in another five years, the debt should be substantially lower. It refinanced $5.5 billion in the first quarter, or about 20% of the total, resulting in annualized expense savings of $145 million.

Carnival paid off $0.5 billion in debt in the first quarter alone after removing more than $3 billion in 2024. If it keeps paying debt off at that rate, in another five years, it will be close to prepandemic debt levels. If interest rates also continue to go lower, it could be in an even better financial position, which is why this stock should soar over the next five years.