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Royal Caribbean Up 61% in a Year Yet Undervalued: Still Time to Buy?
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Royal Caribbean Cruises Ltd. (RCL - Free Report) has been a powerhouse in the cruise industry over the past year, delivering a stellar 61.1% surge. This stand-out performance has left the industry’s modest 1.9% growth and the S&P 500’s 10.7% rise in the dust, solidifying RCL as a market outperformer.
The company is benefiting from strong cruising demand from new and loyal guests and robust booking trends. Also, strength in onboard consumer spending and pre-cruise purchases bodes well.
RCL 19% Below Its Peak – Opportunity for Buyers?
Despite an impressive rally, the RCL stock closed at $225.02 on Tuesday — still trading well below its 52-week high of $277.08 but significantly above its low of $125.06, marking a remarkable comeback. Over the past year, Royal Caribbean has not only delivered a stellar rebound but also outpaced key industry players, including Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) , Carnival Corporation & plc (CCL - Free Report) and OneSpaWorld Holdings Limited (OSW - Free Report) .
However, the stock has dipped nearly 6% in the past month due to broader market volatility. Despite this short-term pullback, RCL’s strong fundamentals remain intact, signaling no cause for concern. Investors should look beyond temporary fluctuations and focus on the company’s solid long-term growth trajectory.
RCL Stock Price Performance
Image Source: Zacks Investment Research
Robust Fundamentals to Drive Royal Caribbean Stock
The company is benefiting from robust bookings, which have remained at record levels, with strong demand across all products and geographies, particularly in North America. Royal Caribbean is experiencing strong booking momentum in 2025, with reservations accelerating since the last reported quarter’s earnings call, marking the best five-week booking period in its history. Demand remains robust across all key products, with bookings consistently outpacing last year.
RCL’s advance purchase deposits (APDs) are higher than in prior years, enabling strategic pricing and yield optimization. Additionally, its direct-to-consumer channels are thriving, supported by expanded digital capabilities that cater to growing consumer preference for online engagement. Travel partners are also contributing significantly, generating higher bookings at elevated rates and reinforcing the company's strong commercial positioning.
The addition of ships bodes well for Royal Caribbean. The company focuses on innovative ships and onboard experiences to differentiate its offering, and deliver superior yields and margins. The launch of ships, including Icon of the Seas, Utopia of the Seas and Silver Ray, alongside investments in private destinations like Perfect Day Mexico and beach clubs in Nassau and Cozumel, enhances guest experience and competitive positioning.
Building on the strong market reception of Icon of the Seas and the anticipation surrounding Star of the Seas, the company announced plans to construct a fourth Icon-class ship, expected to join the Royal Caribbean fleet in 2027. Since its launch, Icon has transformed vacation experiences and has consistently surpassed expectations in guest satisfaction and financial outcomes.
The new vessels have not only been enhancing vacation experiences and attracting fresh customers to the company's brands but also contributing to yield improvements and overall profitability. Upcoming expansions include Celebrity Cruises’ Celebrity Excel, set to launch in late 2025, and Royal Caribbean’s Star of the Seas, debuting in mid-2025. The seventh Oasis-class ship is scheduled for 2028.
Royal Caribbean continues to make use of digital tools for marketing, product development and enhancing the consumer experience. These include revamped websites, new vacation packaging capabilities, support for mobile apps and increased bandwidth onboard to help its guests remain well-connected while at sea.
Analysts Bullish on RCL
In the past 60 days, six and eight analysts have revised earnings estimates for 2025 and 2026, respectively. In the past 60 days, analysts have raised their estimates for the current and the next years by 3.9% to $14.92 and 4.7% to $17.61, respectively. These estimates indicate year-over-year growth rates of 26.4% and 18.1%, respectively.
The Zacks Consensus Estimate for 2025 and 2026 sales are pegged at $17.97 billion and $19.83 billion, suggesting 9% and 10.4% year-over-year growth, respectively.
Image Source: Zacks Investment Research
Royal Caribbean Trades at a Discount – A Prime Entry Point?
RCL is currently priced at an attractive discount relative to its industry, making it a compelling opportunity for investors. With a forward 12-month price-to-earnings (P/E) ratio of 14.48, below the industry average, RCL’s valuation suggests room for upside, reinforcing its appeal for those looking to capitalize on its growth trajectory.
RCL P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
RCL’s Investment Strategy
Royal Caribbean has established itself as a dominant force in the cruise industry, delivering impressive stock gains while maintaining strong fundamentals. The company continues to benefit from surging demand, record-breaking bookings and strategic expansion efforts, including the addition of innovative ships and private destination investments. Its ability to drive higher yields, optimize pricing and enhance guest experiences sets it apart, reinforcing its competitive edge.
Additionally, analysts remain bullish on the stock, reflecting confidence in its long-term growth potential. With shares trading at a discount compared with industry peers, Royal Caribbean presents a compelling opportunity for investors looking to capitalize on its momentum and future expansion. The company currently has a Zacks Rank #2 (Buy).
Image: Bigstock
Royal Caribbean Up 61% in a Year Yet Undervalued: Still Time to Buy?
Royal Caribbean Cruises Ltd. (RCL - Free Report) has been a powerhouse in the cruise industry over the past year, delivering a stellar 61.1% surge. This stand-out performance has left the industry’s modest 1.9% growth and the S&P 500’s 10.7% rise in the dust, solidifying RCL as a market outperformer.
The company is benefiting from strong cruising demand from new and loyal guests and robust booking trends. Also, strength in onboard consumer spending and pre-cruise purchases bodes well.
RCL 19% Below Its Peak – Opportunity for Buyers?
Despite an impressive rally, the RCL stock closed at $225.02 on Tuesday — still trading well below its 52-week high of $277.08 but significantly above its low of $125.06, marking a remarkable comeback. Over the past year, Royal Caribbean has not only delivered a stellar rebound but also outpaced key industry players, including Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) , Carnival Corporation & plc (CCL - Free Report) and OneSpaWorld Holdings Limited (OSW - Free Report) .
However, the stock has dipped nearly 6% in the past month due to broader market volatility. Despite this short-term pullback, RCL’s strong fundamentals remain intact, signaling no cause for concern. Investors should look beyond temporary fluctuations and focus on the company’s solid long-term growth trajectory.
RCL Stock Price Performance
Image Source: Zacks Investment Research
Robust Fundamentals to Drive Royal Caribbean Stock
The company is benefiting from robust bookings, which have remained at record levels, with strong demand across all products and geographies, particularly in North America. Royal Caribbean is experiencing strong booking momentum in 2025, with reservations accelerating since the last reported quarter’s earnings call, marking the best five-week booking period in its history. Demand remains robust across all key products, with bookings consistently outpacing last year.
RCL’s advance purchase deposits (APDs) are higher than in prior years, enabling strategic pricing and yield optimization. Additionally, its direct-to-consumer channels are thriving, supported by expanded digital capabilities that cater to growing consumer preference for online engagement. Travel partners are also contributing significantly, generating higher bookings at elevated rates and reinforcing the company's strong commercial positioning.
The addition of ships bodes well for Royal Caribbean. The company focuses on innovative ships and onboard experiences to differentiate its offering, and deliver superior yields and margins. The launch of ships, including Icon of the Seas, Utopia of the Seas and Silver Ray, alongside investments in private destinations like Perfect Day Mexico and beach clubs in Nassau and Cozumel, enhances guest experience and competitive positioning.
Building on the strong market reception of Icon of the Seas and the anticipation surrounding Star of the Seas, the company announced plans to construct a fourth Icon-class ship, expected to join the Royal Caribbean fleet in 2027. Since its launch, Icon has transformed vacation experiences and has consistently surpassed expectations in guest satisfaction and financial outcomes.
The new vessels have not only been enhancing vacation experiences and attracting fresh customers to the company's brands but also contributing to yield improvements and overall profitability. Upcoming expansions include Celebrity Cruises’ Celebrity Excel, set to launch in late 2025, and Royal Caribbean’s Star of the Seas, debuting in mid-2025. The seventh Oasis-class ship is scheduled for 2028.
Royal Caribbean continues to make use of digital tools for marketing, product development and enhancing the consumer experience. These include revamped websites, new vacation packaging capabilities, support for mobile apps and increased bandwidth onboard to help its guests remain well-connected while at sea.
Analysts Bullish on RCL
In the past 60 days, six and eight analysts have revised earnings estimates for 2025 and 2026, respectively. In the past 60 days, analysts have raised their estimates for the current and the next years by 3.9% to $14.92 and 4.7% to $17.61, respectively. These estimates indicate year-over-year growth rates of 26.4% and 18.1%, respectively.
The Zacks Consensus Estimate for 2025 and 2026 sales are pegged at $17.97 billion and $19.83 billion, suggesting 9% and 10.4% year-over-year growth, respectively.
Image Source: Zacks Investment Research
Royal Caribbean Trades at a Discount – A Prime Entry Point?
RCL is currently priced at an attractive discount relative to its industry, making it a compelling opportunity for investors. With a forward 12-month price-to-earnings (P/E) ratio of 14.48, below the industry average, RCL’s valuation suggests room for upside, reinforcing its appeal for those looking to capitalize on its growth trajectory.
RCL P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
RCL’s Investment Strategy
Royal Caribbean has established itself as a dominant force in the cruise industry, delivering impressive stock gains while maintaining strong fundamentals. The company continues to benefit from surging demand, record-breaking bookings and strategic expansion efforts, including the addition of innovative ships and private destination investments. Its ability to drive higher yields, optimize pricing and enhance guest experiences sets it apart, reinforcing its competitive edge.
Additionally, analysts remain bullish on the stock, reflecting confidence in its long-term growth potential. With shares trading at a discount compared with industry peers, Royal Caribbean presents a compelling opportunity for investors looking to capitalize on its momentum and future expansion. The company currently has a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.