Despite the global pandemic receding, cruise line operator Carnival Corp. (NYSE:CCL) continues to navigate choppy waters. CCL stock is going to need more than just a life raft to recover from the pandemic.

Carnival’s stock has been as unpredictable as its sailing schedule lately. Year-to-date, the company’s share price is up 4.87% at $20.95. It has been trading in a range of $20 to $23 over the past two months. However, CCL stock remains 60% below the pre-pandemic level of nearly $52 a share it was sitting at before Covid-19 landed on North American shores in March 2020.

Despite several attempts at a return to normal, the company and its stock have not been able to recover from the ravages of the pandemic, with the share price sinking every time a new variant of Covid-19 emerges or case counts begin to rise.

Damaged Finances

Like most cruise operators, Carnival’s finances have been torpedoed by the pandemic.

With much of its fleet sitting in docks around the world, the company lost billions in 2020 and sold 12% of its fleet to help raise much needed cash. The company also issued a lot of new stock to raise capital. As recently as this January, Carnival announced that it was issuing $500 million of additional stock, further diluting its number of shares outstanding. The company started this year with $26 billion of long-term debt on its books. The financial losses, rising debt levels, and share dilution have combined to keep CCL stock down.

Additionally, Carnival continues to miss on its quarterly financial targets.

The third quarter of last year marked the sixth consecutive quarter in which Carnival missed the earnings per share (EPS) expectations of Wall Street. The company announced Q3 revenues of $546 million and a net loss of $2.8 billion. However, the third quarter print wasn’t all bad. Carnival did report that its occupancy rate rose to nearly 60% at the end of the quarter from 39% at the start. Plus, the company’s cruises turned cash flow positive for the first time since the onset of the pandemic. Looking forward, Carnival reported that its advanced bookings for the second half of this year are above pre-pandemic levels.

While there is evidence of a gradual improvement, Carnival still has a long way to go to recover from Covid-19, and its heavy debt burden is sinking the company’s finances and its share price.

Calmer Waters?

In its financial statements and media materials, Carnival is doing its utmost to put the pandemic behind it and focus on the year ahead.

The company stresses that it is now operating at close to 67% capacity with 71 ships sailing to destinations around the world. Carnival also notes that reservations for cruises taking place in 2023 are outpacing 2019 pre-pandemic reservations, indicating that demand for cruise vacations is rebounding strongly. Wall Street is acknowledging as much by raising its revenue targets for the cruise operator. Analysts forecast Carnival will report $14.81 billion of revenues this year, rising to $19.92 billion in 2023.

Carnival is also getting some help from the Centers for Disease Control and Prevention (CDC), which now allows cruising for vaccinated people, as well as from many Caribbean nations that are open for cruise travelers and only require a negative PCR test to enter their domain.

Of course risks remain. While health experts continue to say that the pandemic is now likely to be in its final stages, any surprises or the emergence of yet another variant of Covid-19 could throw Carnival into turmoil once again. CCL stock fell 20% in November as the omicron variant was confirmed by the World Health Organization (WHO).

Don’t Buy CCL Stock Just Yet

When it comes to Carnival and its stock, there’s hope but not much else.

While the year ahead looks promising, Carnival continues to be a leaky boat that is taking on water in the form of debt. A lot has to go right for Carnival to get its operations back on track and improve its finances. Until its revenues meaningfully recover, it pays down some of its huge debt load, and buys back some of its own stock, the company’s share price will likely remain depressed and could fall further.

For these reasons, investors should not set sail with Carnival just yet. Wait for smoother seas. CCL stock is not a buy.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.