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Royal Caribbean (RCL)
NYSE:RCL
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Royal Caribbean
(NYSE:RCL)
75Outperform
Positive Factors
Earnings Growth
RCL's investor day highlighted the company's earnings strategy of moderate capacity growth, yield growth, and strong cost controls, which is expected to drive significant EPS growth.
Market Share Expansion
Continuing to gain share of the $2 trillion travel market is a key focus, with even a small shift in hotel demand to cruises having a substantial impact on ship occupancy.
Negative Factors
Earnings Projection
There was some disappointment that the company captured 2025-2027 rather than 2026-2028, which would have included Perfect Day Mexico.
Macro Concerns
The -5% share price drop is attributed to macro concerns rather than issues specific to RCL.
Royal Caribbean (RCL) vs. S&P 500 (SPY)
Market Cap
$50.77B
Dividend Yield0.9%
Average Volume (3M)3.26M
Price to Earnings (P/E)17.2
Beta (1Y)1.43
Revenue Growth18.60%
EPS Growth65.95%
CountryUS
Employees105,950
SectorConsumer Cyclical
Sector Strength46
IndustryTravel Services
Share Statistics
EPS (TTM)10.54
Shares Outstanding269,128,750
10 Day Avg. Volume2,416,440
30 Day Avg. Volume3,264,636
Financial Highlights & Ratios
PEG Ratio0.26
Price to Book (P/B)N/A
Price to Sales (P/S)3.52
Price to Cash Flow (P/CF)9.90
P/FCF Ratio15.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$286.50Price Target Upside61.02% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering22
Royal Caribbean Business Overview & Revenue Model
Company DescriptionRoyal Caribbean Group (RCL) is a prominent global cruise holding company that operates a diverse portfolio of cruise line brands, including Royal Caribbean International, Celebrity Cruises, and Silversea Cruises. The company is renowned for offering innovative cruise experiences, from family-friendly adventures to luxurious, upscale voyages, across various destinations worldwide. Royal Caribbean is known for its state-of-the-art ships, exceptional service, and a wide range of onboard amenities that cater to diverse passenger demographics.
How the Company Makes MoneyRoyal Caribbean Group generates revenue primarily through the sale of cruise tickets and onboard services. The company's primary revenue stream comes from passengers purchasing cruise vacations, which include accommodation, meals, and access to onboard entertainment and facilities. Additionally, Royal Caribbean earns substantial income from onboard spending, including specialty dining, beverage packages, shore excursions, spa services, and retail purchases. The company also benefits from partnerships with travel agencies and online travel platforms, which help in marketing and selling its cruise offerings. Furthermore, Royal Caribbean's revenue is influenced by factors such as occupancy rates, ticket pricing strategies, and operational efficiencies that help manage costs and enhance profitability.
Royal Caribbean Financial Statement Overview
Summary
Royal Caribbean's financial recovery is strong, with impressive income growth and efficient cash flow management. However, the high debt levels present a risk despite improvements in equity returns.Income Statement
Royal Caribbean has shown a strong recovery in its income statement metrics. The gross profit margin has improved significantly, indicating better cost management. The net profit margin and revenue growth rate are both robust, highlighting a successful rebound in operations. The EBIT and EBITDA margins are also strong, reflecting operational efficiency improvements.85
Very Positive
Balance Sheet
The balance sheet shows a moderate picture with some improvement in equity. The debt-to-equity ratio remains high, indicating significant leverage, but the return on equity has improved, suggesting better returns for shareholders. The equity ratio has improved, but the high debt level remains a risk.70
Positive
Cash Flow
Cash flow metrics are strong with a significant increase in free cash flow growth rate, reflecting improved cash management and capital expenditure efficiency. The operating cash flow to net income ratio is healthy, indicating solid cash generation relative to profits.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 16.48B | 13.90B | 8.84B | 1.53B | 2.21B | Gross Profit |
| 7.83B | 6.13B | 2.23B | -1.13B | -556.30M | EBIT |
| 4.11B | 2.88B | -847.93M | -3.87B | -4.60B | EBITDA |
| 5.72B | 4.47B | 586.13M | -2.72B | -3.69B | Net Income Common Stockholders |
| 2.88B | 1.70B | -2.10B | -6.57B | -6.50B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 388.00M | 497.00M | 1.94B | 2.70B | 3.68B | Total Assets |
| 37.07B | 35.13B | 33.78B | 32.26B | 32.47B | Total Debt |
| 20.82B | 22.13B | 23.99B | 21.66B | 20.00B | Net Debt |
| 20.43B | 21.63B | 22.06B | 18.96B | 16.31B | Total Liabilities |
| 29.34B | 30.23B | 30.91B | 27.17B | 23.70B | Stockholders Equity |
| 7.56B | 4.72B | 2.87B | 5.09B | 8.76B |
| Cash Flow | Free Cash Flow | |||
| 2.00B | 580.00M | -2.23B | -4.11B | -5.70B | Operating Cash Flow |
| 5.26B | 4.48B | 481.86M | -1.88B | -3.73B | Investing Cash Flow |
| -3.45B | -3.92B | -2.99B | -2.14B | -2.18B | Financing Cash Flow |
| -1.92B | -1.99B | 1.74B | 3.04B | 9.35B |
Royal Caribbean Technical Analysis
Negative
177.93
Price Trends
233.52
Negative
234.87
Negative
202.67
Negative
Market Momentum
-6.45
Negative
40.31
Neutral
31.14
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RCL, the sentiment is Negative. The current price of 177.93 is below the 20-day moving average (MA) of 209.85, below the 50-day MA of 233.52, and below the 200-day MA of 202.67, indicating a bearish trend. The MACD of -6.45 indicates Negative momentum. The RSI at 40.31 is Neutral, neither overbought nor oversold. The STOCH value of 31.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RCL.
Royal Caribbean Risk Analysis
Royal Caribbean disclosed 36 risk factors in its most recent earnings report. Royal Caribbean reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Royal Caribbean Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $50.77B | 17.25 | 46.85% | 0.90% | 18.60% | 65.95% | |
73 Outperform | $26.07B | 18.56 | 41.30% | 2.33% | 8.93% | 22.50% | |
67 Neutral | $7.74B | 16.74 | -51.73% | 1.37% | 9.13% | -30.00% | |
66 Neutral | $22.48B | 10.99 | 25.87% | ― | 12.66% | 403.58% | |
66 Neutral | $7.89B | 11.23 | 21.76% | ― | 6.66% | -24.59% | |
63 Neutral | $7.18B | 9.20 | 105.46% | ― | 10.87% | 433.82% | |
59 Neutral | $12.18B | 11.09 | -1.08% | 3.77% | 1.26% | -19.82% |
* Consumer Cyclical Sector Average
Performance Comparison
RCL
Royal Caribbean
177.93
40.76
29.71%
CCL
Carnival
16.50
0.84
5.36%
LVS
Las Vegas Sands
33.37
-18.07
-35.13%
MGM
MGM Resorts
26.86
-19.44
-41.99%
WYNN
Wynn Resorts
70.09
-34.71
-33.12%
NCLH
Norwegian Cruise Line
15.69
-3.70
-19.08%
Royal Caribbean Earnings Call Summary
Earnings Call Date: Jan 28, 2025 | % Change Since: -24.61% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive outlook with record-breaking performance, strategic expansions, and strong future bookings. Despite some financial headwinds related to stock compensation and fuel costs, the overall sentiment is optimistic.Highlights
Record Vacations and High Customer Satisfaction
Royal Caribbean delivered a record 8.6 million vacations in 2024 with high customer satisfaction scores.
Strong Financial Performance
Achieved 11.6% net yield growth, over $5 billion in operating cash flow, and returned the balance sheet to investment-grade metrics.
Meeting Environmental Targets
Met double-digit carbon intensity reduction target a full year ahead of schedule.
New Initiatives and Expansion
Announced Celebrity River Cruises set to begin in 2027 with an initial order for 10 ships, reflecting a strategic move into the river cruising market.
Strong Start to 2025
Bookings have accelerated, resulting in the best five booking weeks in the company's history.
2025 Financial Outlook
Anticipated 23% earnings growth in 2025 with capacity expected to grow by 5%.
Lowlights
Stock-Based Compensation Cost Impact
Stock-based compensation costs increased due to a rise in share price, impacting financial results.
FX and Fuel Headwinds
The 2025 EPS guidance includes a $0.65 headwind due to foreign exchange and fuel rates.
Company Guidance
During the Royal Caribbean Group's earnings call, the company reported significant achievements for the fiscal year 2024, including delivering 8.6 million vacations with an 11.6% net yield growth and generating over $5 billion in operating cash flow. They successfully returned their balance sheet to investment-grade metrics and achieved their Trifecta financial goals 18 months ahead of schedule. The company also met its carbon intensity reduction target a full year early. Looking ahead, Royal Caribbean expects a 5.4% capacity growth in 2025, driven by new ship introductions, and anticipates a yield growth of 2.5% to 4.5%. They project adjusted earnings per share of $14.35 to $14.65, despite facing $0.65 in headwinds from foreign exchange and fuel rates. The company remains focused on moderate capacity growth, yield growth, and strong cost control to drive superior financial performance. Additionally, they announced the launch of Celebrity River Cruises, with an initial order for 10 ships expected to start operations in 2027, as part of their strategy to expand into the river cruise market.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.