Royal Caribbean Cruises Ltd (RCL) stock analysis

P/E below its 5-year median

Royal Caribbean Cruises's P/E of 19.8 is below its own 5-year median of 20.2.

P/E above the industry

Royal Caribbean Cruises's P/E of 19.8 is above the Water Transportation median of 12.7.

EV/EBITDA above its 5-year median

Royal Caribbean Cruises's EV/EBITDA of 15.6 is above its 5-year median of 14.9.

P/B above the industry

Royal Caribbean Cruises's price-to-book of 7.65 is above the Water Transportation median of 2.12.

Trading above fair value

The share price of $335.18 is above our fair value estimate of $235.45.

Margin of safety under 20%

The price is 42.4% above fair value, so there is no margin of safety.

Revenue growing 10%+ a year

Revenue grew 26.6% a year over the last three fiscal years.

EPS growth over 3 years

Needs positive EPS three years ago and today.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing faster than the industry

Revenue grew 9.7% over the last twelve months; the Water Transportation median is 4.9%.

Guidance lowered

Royal Caribbean Cruises lowered its 2027 Capacity changes outlook on Oct 27, 2026.

Gross margin improving

Gross margin was 49.1% over the last twelve months, against 49.0% a year earlier.

Return on equity under 15%

Return on equity was 41.7% over the last twelve months and averaged 2.0% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 16.4%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Royal Caribbean Cruises's return on equity of 41.7% is above the Water Transportation median of 13.0%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin above its 5-year average

Net margin was 23.8% over the last twelve months, against a 5-year average of -62.9%.

Net margin above the industry

Royal Caribbean Cruises's net margin of 23.8% is above the Water Transportation median of 11.4%.

High debt

Debt is 191% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 221% five years ago to 191%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 30.9% of total debt.

Interest not well covered

Operating income covers interest expense 4.9 times; we look for at least 5.

Short-term assets don't cover short-term debts

Current assets are 0.22 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.48; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Royal Caribbean Cruises paid dividends worth 1.6% of the share price over the last twelve months.

Yield below Treasuries

The 1.6% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Royal Caribbean Cruises yields 1.6%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 9 fiscal years.

Covered by earnings

Dividends take 29.6% of net income.

Covered by free cash flow

Dividends take 89.2% of free cash flow.