Northcoast has begun coverage of Royal Caribbean (RCL, Financial) with a "Buy" recommendation and set a price target of $279. The firm regards Royal Caribbean as the premier stock in the "Big 3" group of cruise lines, expressing confidence that investors will see enduring rewards from holding its shares.
Despite the stock's notable performance over the last two years, Northcoast anticipates further favorable developments. This optimism is fueled by expectations of continued capital returns to shareholders through share buybacks and potential valuation growth. The firm also highlights Royal Caribbean's robust financial standing, which it believes is currently the strongest in the company's history.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 22 analysts, the average target price for Royal Caribbean Group (RCL, Financial) is $268.43 with a high estimate of $330.00 and a low estimate of $220.00. The average target implies an upside of 26.70% from the current price of $211.87. More detailed estimate data can be found on the Royal Caribbean Group (RCL) Forecast page.
Based on the consensus recommendation from 28 brokerage firms, Royal Caribbean Group's (RCL, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Royal Caribbean Group (RCL, Financial) in one year is $177.73, suggesting a downside of 16.11% from the current price of $211.87. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Royal Caribbean Group (RCL) Summary page.
RCL Key Business Developments
Release Date: January 28, 2025
- Net Yield Growth: 11.6% for the full year 2024.
- Operating Cash Flow: Over $5 billion in 2024.
- Adjusted Earnings Per Share (EPS): $1.63 for Q4 2024.
- Net Yield Growth for Q4: 7.3%.
- Adjusted EBITDA: $1.1 billion for Q4 2024.
- Operating Cash Flow for Q4: $1.5 billion.
- Capacity Growth for 2025: Expected to increase by 5.4% year-over-year.
- Expected Yield Growth for 2025: 2.5% to 4.5%.
- Adjusted EPS Guidance for 2025: $14.35 to $14.65.
- Fuel Expense for 2025: Anticipated at $1.17 billion.
- Liquidity at Year-End 2024: $4.1 billion.
- Leverage at Year-End 2024: Low 3 times.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Royal Caribbean Group (RCL, Financial) delivered a record 8.6 million vacations in 2024 with high customer satisfaction scores.
- The company achieved an 11.6% net yield growth and generated over $5 billion in operating cash flow.
- RCL met its double-digit carbon intensity reduction target a year ahead of schedule.
- The introduction of Celebrity River Cruises in 2027 is expected to unlock new growth opportunities.
- Bookings for 2025 have accelerated, resulting in the best five booking weeks in the company's history.
Negative Points
- Net cruise costs excluding fuel increased by 13.5% in constant currency, driven by higher stock-based compensation.
- The company faces headwinds from foreign exchange and fuel rates, impacting earnings guidance.
- RCL's yield growth guidance for 2025 is lower compared to the high single-digit per diems reported in 2024.
- The river cruise market is fragmented, presenting challenges in capturing market share.
- The new river cruise ships will not operate year-round, potentially affecting overall productivity.
