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Royal Caribbean Cruises (RCL)
NYSE:RCL
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Royal Caribbean
(NYSE:RCL)
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Rating:77Outperform
Price Target:
$393.00
▲(21.05% Upside)
Score is driven by strong financial recovery and upbeat 2026 guidance (higher EPS/EBITDA and >$7B operating cash flow). Technicals support the bull trend, though RSI signals an extended move. The main constraints are elevated leverage and softer recent free-cash-flow conversion, while valuation is fair with a modest dividend.
Positive Factors
Margin expansion & profit recovery
Sustained margin improvement to ~24% TTM reflects stronger pricing power, cost discipline and scale benefits across brands. Durable higher margins boost free cash generation potential, support reinvestment and returns, and increase resilience across economic cycles.
Operating cash flow strength
Consistent ~$6.5B operating cash flow provides durable funding for debt service, capex for new ships and private destinations, and shareholder returns. Strong OCF underpins financial flexibility and the ability to execute long‑term fleet and experience investments.
Fleet and destination expansion
Aggressive fleet and private-destination expansion broadens product mix and addressable markets (river cruises, new Discovery class, private destinations). This creates durable competitive differentiation, drives future yield upside and customer loyalty over multiple years.
Negative Factors
Elevated leverage
Meaningful debt (~$22B, >2x equity) limits financial flexibility in a cyclical travel industry. Elevated leverage increases interest and refinancing risk, constrains rapid deleveraging or opportunistic investment during downturns, and heightens sensitivity to demand shocks.
Weak free cash flow conversion
Low FCF relative to earnings (≈$1.2B TTM) signals heavy capex and working capital needs tied to new builds and destinations. Persistent weak cash conversion can slow debt paydown, limit organic funding for growth, and increase reliance on external financing for strategic projects.
Regulatory emissions cost exposure
Expansion of EU ETS to full emissions for European itineraries creates a structural cost headwind tied to carbon pricing and fuel costs. This raises long‑term operating cost sensitivity, pressuring margins and requiring ongoing fuel strategy, hedging and pass-through pricing to protect profitability.
Royal Caribbean (RCL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$88.54B
Dividend Yield1.09%
Average Volume (3M)2.04M
Price to Earnings (P/E)20.8
Beta (1Y)1.56
Revenue Growth8.61%
EPS Growth49.58%
CountryUS
Employees105,950
SectorConsumer Cyclical
Sector Strength84
IndustryTravel Services
Share Statistics
EPS (TTM)2.80
Shares Outstanding272,712,980
10 Day Avg. Volume2,937,195
30 Day Avg. Volume2,044,542
Financial Highlights & Ratios
PEG Ratio0.32
Price to Book (P/B)7.96
Price to Sales (P/S)3.65
P/FCF Ratio30.15
Enterprise Value/Market Cap1.24
Enterprise Value/Revenue6.14
Enterprise Value/Gross Profit13.12
Enterprise Value/Ebitda15.95
Forecast
1Y Price Target
$366.15Price Target Upside12.78% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Royal Caribbean Business Overview & Revenue Model
Company DescriptionRoyal 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.
How the Company Makes MoneyRoyal Caribbean generates revenue primarily through ticket sales from cruise bookings, which constitute a significant portion of its earnings. In addition to cruise fares, the company also earns substantial income from onboard spending, including dining, beverages, shore excursions, spa services, and retail purchases made by passengers during their voyages. The company's revenue model is enhanced by its ability to upsell various experiences and packages, such as specialty dining and premium beverage packages. Furthermore, Royal Caribbean benefits from strategic partnerships with travel agencies, online travel platforms, and tourism boards, which help to drive customer bookings. Seasonal promotions and loyalty programs also contribute to maintaining a consistent flow of customers, thereby ensuring steady revenue streams throughout the year.
Royal Caribbean Key Performance Indicators (KPIs)
Royal Caribbean Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call communicated strong, broad-based operational and financial momentum: record guests, double-digit revenue growth expectations for 2026, sizable EBITDA and cash flow expansion, continued fleet and destination investments, digital/AI adoption, and disciplined capital returns and balance sheet strength. Management acknowledged manageable near-term headwinds from higher capacity (notably in the Caribbean), dry-dock timing, China itinerary changes, and cost pressure from ramping private destinations and emissions regulations, but provided guidance and mitigation plans. Overall, the positive achievements, guidance, and strategic investments substantially outweigh the outlined challenges.Q4-2025 Updates
Positive Updates
Record Guest Volume and Strong Customer Satisfaction
Delivered a record 9.4 million vacations in 2025 with very high guest satisfaction and NPS that outpaces industry standards; total guests up 45% since 2019 with millennials and younger nearly doubling.
Robust Revenue and Earnings Growth
Nearly $18 billion of total revenue in 2025; full-year total revenue grew 8.8% year-over-year; adjusted EPS grew 33% to $15.64 for the full year; fourth quarter adjusted EPS $2.80 (above guidance).
Margin Expansion, EBITDA and Cash Flow
Adjusted EBITDA grew 17.6% to just over $7 billion in 2025; generated approximately $6.4–$6.5 billion of operating cash flow for the year; committed to >$7 billion operating cash flow in 2026 guidance.
Capital Returns and Strong Balance Sheet
Returned $2.0 billion to shareholders via dividends and share buybacks in 2025; ended the quarter with $7.2 billion liquidity and leverage well below 3x, achieving investment-grade metrics.
Positive 2026 Financial Outlook
2026 guidance: revenue expected to increase double-digits; net yield growth guided 1.5%–3.5%; full-year adjusted EPS $17.70–$18.10 (≈14% YoY at midpoint); adjusted EBITDA near $8 billion (~13% YoY) and margin just over 40%; operating cash flow expected >$7 billion.
Capacity and Deployment Growth
Capacity expected up 6.7% in 2026 (mid-single digits moderate growth); deployment mix: Caribbean 57% of capacity (up 8% vs prior year), Europe 15% (up 5%), Alaska 5% (up 3%).
Fleet & Destination Expansion
Committed to 10 additional Celebrity River Cruise ships (expanding fleet to 20 by 2031); announced Discovery class for Royal Caribbean (2 firm + 4 options); opened Royal Beach Club Paradise Island and added new ships (Star of the Seas, Celebrity XL, Legend upcoming).
Digital and Tech Momentum
Fourth quarter app active users up 25% YoY; e-commerce traffic up 10% YoY in 2025; scaling AI/GenAI across commercial and operations to personalize guest experience and drive efficiency.
Fuel Efficiency and Hedging
Projected fuel expense ~ $1.17 billion for 2026 with ~60% hedged; fuel consumption per APCD improved ~4% vs 2025; LNG and biofuel blends expected to be ~10% of fuel consumption (vs 8% in 2025).
Multi-year Transformation Since 2019
Since 2019: total revenue +64%, adjusted EBITDA +94%, operating cash flow +75%, net income more than doubled — indicating improved scale, profitability and resilience.
Negative Updates
Elevated Capacity in Caribbean and Industry Supply
2026 capacity growth (6.7%) and region-specific capacity increases (Caribbean +8%) create elevated competition; management noted elevated regional capacity could pressure close-in pricing dynamics despite current strong demand.
Dry Dock Timing and Yield Cadence Headwinds
More dry docks in 2026 (with larger/premium hardware in dry dock) affect quarter-to-quarter yield comparisons, particularly in Q2; management expects H2 yields to be stronger than H1 due to timing and deployment mix.
Costs from Private Destinations Ramp-Up
Approximately 200 basis points of cost headwinds related to ramping private destinations (Santorini, Cozumel, Perfect Day Mexico) that occur without APCD increases; full-year net cruise costs excluding fuel expected flat to up ~1%.
China Itinerary Modifications and Redeployments
Recent itinerary changes in China create a ~30 basis point negative impact to Q1 net yields and required redeployments to lower-yielding itineraries in some cases, an unanticipated headwind to near-term yield.
Regulatory & Emissions Exposure
EU ETS scope expands to 100% of emissions for European itineraries in 2026 (up from 70% in 2025), increasing regulatory cost exposure tied to fuel and emissions pricing.
Fuel & Cost Sensitivities
Although 60% of fuel is hedged, management projects ~$1.17B fuel expense for 2026 — unfavorable fuel or currency moves could pressure guidance; Q1 net cruise costs ex-fuel expected up 0.9%–1.4%.
Company Guidance
Royal Caribbean guided 2026 for double‑digit revenue growth with full‑year net yield growth of 1.5%–3.5% and capacity up 6.7% (APCDs +8.5% in Q1/Q3, +5% in Q2/Q4); full‑year adjusted EPS of $17.70–$18.10 (≈14% YoY at midpoint), adjusted EBITDA just shy of $8.0B (margin just over 40%), and operating cash flow >$7.0B. They expect full‑year net cruise costs excluding fuel to be flat to +1% (after a 10 bps decrease in 2025) but noted ~200 bps of cost headwinds from private‑destination ramp‑up; fuel expense is projected at ≈$1.17B with ~60% hedged, ~10% of fuel consumption from LNG/biofuel blends (vs 8% in 2025), and fuel consumption per APCD improving ~4% YoY. First‑quarter guidance: capacity +8.5%, net yields +1.0%–1.5%, net cruise costs ex‑fuel +0.9%–1.4%, and Q1 adjusted EPS $3.18–$3.28; balance sheet highlights include $7.2B liquidity, leverage <3x, planned capital investment ≈$5.0B (non‑ship ~$1.8B), continued strategic investments and enhanced capital returns.Royal Caribbean Financial Statement Overview
Summary
Strong rebound in revenue and profitability (TTM net margin ~24%) and solid operating cash flow (~$6.5B TTM). Offsetting risks are still-elevated leverage (~$22B debt, >2x equity) and weaker recent free cash flow (~$1.2B TTM, low conversion vs net income).Income Statement
Results show a strong post-downturn recovery with revenue rising from $8.8B (2022) to $13.9B (2023) to $16.5B (2024) and $17.9B in TTM (Trailing-Twelve-Months). Profitability has inflected materially: net margin improved from negative in 2022 to ~12% (2023), ~17% (2024), and ~24% in TTM, with solid operating profitability as well. The main weakness is that growth has normalized sharply in TTM (low single digits versus the prior year’s stronger growth), which raises the bar for continued earnings expansion from here.86
Very Positive
Balance Sheet
The balance sheet remains leveraged, with total debt at ~$22.0B in TTM (Trailing-Twelve-Months) and debt still running at a little over 2x equity, which is meaningful for a cyclical travel business. A key positive is improving capitalization: equity has rebuilt to ~$10.0B in TTM from ~$2.9B in 2022, and returns on equity are strong, reflecting the earnings recovery. The key risk is that leverage is still elevated versus pre-recovery levels, leaving less flexibility if demand softens or costs rise.62
Positive
Cash Flow
Operating cash flow is strong at ~$6.5B in TTM (Trailing-Twelve-Months), supporting debt service and reinvestment, and marks a major improvement from 2020–2022. However, free cash flow weakened in TTM to ~$1.2B and declined sharply versus the prior year, and free cash flow covers only about one-third of net income—suggesting heavier capital spending and/or working-capital needs are limiting cash conversion. Overall cash generation is healthy, but the drop in free cash flow is the main watch item.68
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 17.93B | 16.48B | 13.90B | 8.84B | 1.53B | 2.21B |
| Gross Profit | 8.40B | 7.83B | 6.13B | 2.22B | -1.21B | -556.30M |
| EBITDA | 6.91B | 6.09B | 4.56B | 615.00M | -2.67B | -3.65B |
| Net Income | 4.27B | 2.88B | 1.70B | -2.16B | -5.26B | -5.80B |
Balance Sheet | ||||||
| Total Assets | 41.62B | 37.07B | 35.13B | 33.78B | 32.26B | 32.47B |
| Cash, Cash Equivalents and Short-Term Investments | 825.00M | 388.00M | 497.00M | 1.94B | 2.70B | 3.68B |
| Total Debt | 22.04B | 20.82B | 22.13B | 23.99B | 21.69B | 20.00B |
| Total Liabilities | 31.37B | 29.34B | 30.23B | 30.91B | 27.17B | 23.70B |
| Stockholders Equity | 10.04B | 7.56B | 4.72B | 2.87B | 5.09B | 8.76B |
Cash Flow | ||||||
| Free Cash Flow | 1.24B | 2.00B | 580.00M | -2.23B | -4.11B | -5.70B |
| Operating Cash Flow | 6.46B | 5.26B | 4.48B | 481.00M | -1.88B | -3.73B |
| Investing Cash Flow | -5.01B | -3.45B | -3.92B | -2.99B | -2.15B | -2.18B |
| Financing Cash Flow | -1.02B | -1.92B | -1.99B | 1.74B | 3.04B | 9.35B |
Royal Caribbean Technical Analysis
Positive
324.65
Price Trends
281.86
Positive
291.44
Positive
290.05
Positive
Market Momentum
10.13
Negative
65.45
Neutral
80.37
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RCL, the sentiment is Positive. The current price of 324.65 is above the 20-day moving average (MA) of 296.10, above the 50-day MA of 281.86, and above the 200-day MA of 290.05, indicating a bullish trend. The MACD of 10.13 indicates Negative momentum. The RSI at 65.45 is Neutral, neither overbought nor oversold. The STOCH value of 80.37 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $32.45B | 25.34 | 104.40% | 0.56% | 7.29% | 36.51% | |
77 Outperform | $88.54B | 20.80 | 48.50% | 1.09% | 8.61% | 49.58% | |
71 Outperform | $79.63B | 31.07 | 30.78% | ― | 10.56% | 47.16% | |
67 Neutral | $10.00B | 18.01 | 39.87% | ― | 3.59% | 19.09% | |
66 Neutral | $32.01B | 35.18 | 9999.00% | ― | 20.04% | ― | |
63 Neutral | $161.23B | 32.51 | ― | 0.71% | 12.96% | 3.66% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% |
* Consumer Cyclical Sector Average
RCL
Royal Caribbean
334.05
73.81
28.36%
EXPE
Expedia
276.67
109.55
65.55%
BKNG
Booking Holdings
5,122.25
477.82
10.29%
NCLH
Norwegian Cruise Line
23.64
-4.25
-15.24%
ABNB
Airbnb
131.31
0.57
0.44%
VIK
Viking Holdings Ltd
75.70
24.25
47.13%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.