Shares of Royal Caribbean Cruises (RCL) have been choppy this month, which gives investors a fresh look at the stock’s valuation compared to recent performance. Over the past month, the stock fell 18%.
See our latest analysis for Royal Caribbean Cruises.
While the past month has been turbulent for Royal Caribbean Cruises’ share price, the bigger picture is much stronger, with a 1-year total shareholder return of about 7.7% and a remarkable 3-year total return of over 325%. Recent choppiness hints at shifting investor sentiment after last year’s surge, but longer-term holders are still well ahead of where they started.
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But after a sharp correction and such strong long-term gains, is Royal Caribbean Cruises now trading below its true worth? Or is the market already factoring in all of its anticipated growth, leaving little room for upside?
Royal Caribbean Cruises is trading far below what the most closely followed narrative considers fair value, with its last close at $246.71 compared to a calculated worth that is over a quarter higher. This sets up a striking disconnect between recent price action and what analysts believe the company could be worth based on future growth.
The introduction of new ships like Star of the Seas and Celebrity Xcel, coupled with existing fleet performance, is expected to drive yield growth between 2.6% and 4.6% in 2025, positively impacting revenue and earnings. Enhanced guest experiences, investments in private destinations, and new ships are driving higher onboard spending and pre-cruise purchases, which should support revenue growth by increasing per-passenger spend.
Curious how adding new ships and enhancing guest experiences could translate into a valuation this high? Suspense surrounds the financial assumptions behind this price, especially the projected growth and expected shift in profit margins. The details may surprise you. Explore what’s driving this bold estimate and see if the story holds up under scrutiny.
Result: Fair Value of $336.78 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, continued economic uncertainty and a potential slowdown in consumer demand could quickly shift Royal Caribbean’s outlook and put pressure on its impressive growth assumptions.
Find out about the key risks to this Royal Caribbean Cruises narrative.
If you see the story differently or want to dive deeper into the numbers yourself, it’s easy to craft your own take on Royal Caribbean’s outlook in just a few minutes. Do it your way
A great starting point for your Royal Caribbean Cruises research is our analysis highlighting 5 key rewards and 3 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include RCL.
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