Back to top

Are Investors Undervaluing Royal Caribbean (RCL) Right Now?

Read MoreHide Full Article

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Royal Caribbean (RCL - Free Report) . RCL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 11.58, which compares to its industry's average of 16.89. Over the past year, RCL's Forward P/E has been as high as 16.69 and as low as 10.87, with a median of 14.27.

Investors will also notice that RCL has a PEG ratio of 0.73. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. RCL's PEG compares to its industry's average PEG of 1.04. Over the past 52 weeks, RCL's PEG has been as high as 0.77 and as low as 0.55, with a median of 0.69.

Finally, we should also recognize that RCL has a P/CF ratio of 8.63. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. RCL's P/CF compares to its industry's average P/CF of 8.63. Within the past 12 months, RCL's P/CF has been as high as 11.07 and as low as 8.03, with a median of 9.98.

These are only a few of the key metrics included in Royal Caribbean's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, RCL looks like an impressive value stock at the moment.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Royal Caribbean Cruises Ltd. (RCL) - free report >>

More from Zacks Tale of the Tape

You May Like