Royal Caribbean Cruises Ltd. (RCL) | Investment Case

1. Company Snapshot

1.a. Company Description

Royal Caribbean Cruises Ltd.operates as a cruise company worldwide.The company operates cruises under the Royal Caribbean International, Celebrity Cruises, Azamara, and Silversea Cruises brands, which comprise a range of itineraries that call on approximately 1,000 destinations.

As of February 25, 2022, it operated 61 ships.The company was founded in 1968 and is headquartered in Miami, Florida.

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1.b. Last Insights on RCL

Royal Caribbean Cruises Ltd.'s recent performance was negatively impacted by a revenue miss and disappointing guidance in its Q3 2025 earnings report. Despite record bookings and strong profitability, the company's stock declined. Stephens Inc. AR reduced its stake in the company by 15.6%, potentially signaling decreased investor confidence. Additionally, social sentiment turned negative following earnings, contributing to the decline. The company's revenue growth and passengers carried were lower than anticipated, adding to investor concerns. Management's guidance for 2026, although optimistic, did not alleviate short-term worries.

1.c. Company Highlights

Last Price	257.66
Change Percentage	-0.62%
Open	259.83
Previous Close	259.27
Market Cap ( Millions)	70267
Volume	2111446
Year High	366.5
Year Low	164.01
M A 50	285.72
M A 200	277.16

FCF Yield	2.90%
Dividend Yield	1.18%
ROE	46.81%
Debt / Equity	207.84%
Net Debt / EBIDTA	304.25%
Price To Book	6.94
Price Earnings Ratio	17.22
Price To FCF	34.53
Price To sales	4.03
EV / EBITDA	13.45

2. Royal Caribbean's Strong Q3 Earnings: A Closer Look

Royal Caribbean Group reported a robust third quarter, with adjusted earnings per share (EPS) of $5.75, beating estimates of $5.69. The company's net yields grew 2.4% in constant currency, driven by stronger-than-expected close-in demand. Adjusted gross EBITDA margin was 44.6%, 60 basis points better than last year. Revenue growth was fueled by accelerated demand, growing loyalty, and all-time high guest satisfaction.

Publication Date: Oct -30

                                    📋 Highlights
                                    Q3 Net Yield Growth::
                                                2.4% in constant currency, 15 bps above guidance, driven by strong close-in demand.
Adjusted EBITDA Margin::
                                                44.6%, up 60 bps YoY, with operating cash flow of $1.5 billion.
2025 Adjusted EPS Outlook::
                                                $15.58–$15.63, with 18% adjusted EBITDA growth to $7 billion.
Land-Based Destinations::
                                                Portfolio expanding from 2 to 8 by 2028, including Royal Beach Club in Santorini.
Capital Returns::
                                                $1.6 billion returned to shareholders since July 2024 via dividends and $1.3M share repurchases.

                                

Financial Performance Highlights

The company's operating cash flow was $1.5 billion, and adjusted EPS was 11% higher than last year. For the full year, Royal Caribbean expects net yield growth of 3.5% to 4%, driven by gains in load factor and APD across new and like-for-like hardware. The company's guidance for adjusted EPS is between $15.58 and $15.63.

Valuation Metrics

With a P/E Ratio of 18.71 and an EV/EBITDA of 14.33, Royal Caribbean's valuation appears reasonable, considering its strong growth prospects. The company's ROE of 46.81% and ROIC of 14.47% indicate a high level of profitability. Analysts estimate next year's revenue growth at 9.4%, which is expected to drive further earnings growth.

Operational Updates and Outlook

Royal Caribbean is focused on building a vacation platform that leads the leisure market through innovative ships, exclusive destinations, and technology. The company has made significant investments, including the launch of the Royal Beach Club, Santorini, and expects to increase its exclusive land-based destination portfolio from 2 to 8 by 2028. For 2026, the company expects earnings to have a $17 handle, driven by moderate yield growth and anemic cost growth.

Balance Sheet and Capital Return

Royal Caribbean ended the quarter with $6.8 billion in liquidity and adjusted leverage below 3x on an LTM basis. The company has a strong balance sheet, allowing for growth ambitions and returning capital to shareholders. The board of directors authorized a 30% increase to the quarterly dividend to $1 per common share, and the company returned $1.6 billion of capital to shareholders through dividends and share repurchases since July 2024.

3. NewsRoom

Royal Caribbean (RCL) Stock Sinks As Market Gains: Here's Why

Dec -04

Source:

Flight Centre (OTCMKTS:FGETF) & Royal Caribbean Cruises (NYSE:RCL) Head-To-Head Analysis

Dec -04

Source: defenseworld.net

History Says These 7 S&P 500 Stocks Often Rally In December

Dec -01

Source: feeds.benzinga.com

5 Reasons To Buy Royal Caribbean

Dec -01

Source: seekingalpha.com

Baltimore Washington Financial Advisors Inc. Increases Stock Position in Royal Caribbean Cruises Ltd. $RCL

Nov -27

Source: defenseworld.net

Dow Stays Hot, Shrugs Off Big Tech Volatility

Nov -25

Source: schaeffersresearch.com

Can Exclusive Destinations Be RCL's Next Revenue Engine?

Nov -25

Source: zacks.com

Carnival vs. Royal Caribbean: Which Cruise Stock Is the Better Buy Now?

Nov -24

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.30%)

6. Segments

Recreational - Cruise Lines

Expected Growth: 8.3%

Driven by increasing consumer spending on luxury travel, Royal Caribbean Cruises Ltd. benefits from its strong brand recognition, diverse itineraries, and ongoing ship modernization, fueling growth in the premium cruise segment.

7. Detailed Products

Cruises

Royal Caribbean offers a wide range of cruise itineraries to destinations around the world, including the Caribbean, Alaska, Europe, and more.

Shore Excursions

Royal Caribbean offers a variety of shore excursions at each port of call, including snorkeling trips, cultural tours, and adventure activities.

Hotel Stays

Royal Caribbean offers pre- and post-cruise hotel stays in select cities, allowing guests to extend their vacation.

Flight Services

Royal Caribbean offers flight services to and from cruise departure ports, making it easy to get to and from the ship.

Cruise and Stay Packages

Royal Caribbean offers packages that combine a cruise with a hotel stay, allowing guests to explore destinations before or after their cruise.

Wedding and Honeymoon Packages

Royal Caribbean offers romantic wedding and honeymoon packages, complete with ceremony and reception venues, flowers, and photography.

Specialty Dining

Royal Caribbean offers a range of specialty dining options, including fine dining restaurants and casual eateries.

Spa and Wellness

Royal Caribbean offers a range of spa and wellness services, including massages, facials, and fitness classes.

8. Royal Caribbean Cruises Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Royal Caribbean Cruises Ltd. faces moderate threat from substitutes, as customers have alternative options for leisure activities such as land-based vacations, theme parks, and other forms of entertainment.

Bargaining Power Of Customers

Royal Caribbean Cruises Ltd. has a high bargaining power of customers, as customers have many options for cruise vacations and can easily switch to competitors if they are not satisfied with the services.

Bargaining Power Of Suppliers

Royal Caribbean Cruises Ltd. has a low bargaining power of suppliers, as the company is a large buyer of goods and services and has the ability to negotiate favorable prices.

Threat Of New Entrants

Royal Caribbean Cruises Ltd. faces a low threat of new entrants, as the cruise industry has high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

Royal Caribbean Cruises Ltd. operates in a highly competitive industry, with several major players competing for market share, which leads to a high intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	82.00%
Debt Cost	6.36%
Equity Weight	18.00%
Equity Cost	16.39%
WACC	8.17%
Leverage	455.48%

11. Quality Control: Royal Caribbean Cruises Ltd. passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Booking

A-Score: 6.3/10

Value: 3.8

Growth: 8.7

Quality: 8.0

Yield: 1.0

Momentum: 7.5

Volatility: 8.7

1-Year Total Return ->

Lowe's

A-Score: 5.6/10

Value: 5.7

Growth: 6.7

Quality: 5.5

Yield: 4.0

Momentum: 3.0

Volatility: 9.0

1-Year Total Return ->

Lennar

A-Score: 5.4/10

Value: 7.5

Growth: 7.2

Quality: 7.1

Yield: 3.0

Momentum: 1.5

Volatility: 6.3

1-Year Total Return ->

D.R. Horton

A-Score: 5.4/10

Value: 5.9

Growth: 7.6

Quality: 6.6

Yield: 2.0

Momentum: 4.0

Volatility: 6.0

1-Year Total Return ->

Royal Caribbean Cruises

A-Score: 5.1/10

Value: 2.5

Growth: 6.9

Quality: 6.2

Yield: 1.0

Momentum: 8.5

Volatility: 5.3

1-Year Total Return ->

Airbnb

A-Score: 5.0/10

Value: 1.9

Growth: 9.2

Quality: 8.4

Yield: 0.0

Momentum: 4.0

Volatility: 6.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

13.36%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.17%

Royal Caribbean Cruises Ltd. - LR0008862868

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on RCL

1.c. Company Highlights

Expensive

Strong Momentum

Medium Volatility

Earnings Beats

Revenues Beats

Average Growth

Average Yield

Lower Growth

Fairly Valued

Average Quality

2. Royal Caribbean's Strong Q3 Earnings: A Closer Look

Financial Performance Highlights

Valuation Metrics

Operational Updates and Outlook

Balance Sheet and Capital Return

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.30%)

6. Segments

Recreational - Cruise Lines

Expected Growth: 8.3%

7. Detailed Products

Cruises

Shore Excursions

Hotel Stays

Flight Services

Cruise and Stay Packages

Wedding and Honeymoon Packages

Specialty Dining

Spa and Wellness

8. Royal Caribbean Cruises Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Royal Caribbean Cruises Ltd. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

257.66$

Current Price

257.66$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA