Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 26 Aug, 25 | RCL | Buy | USD 347.5 | USD 365.0 | USD 401.0 | 3 days | Closed |
5.47%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Royal Caribbean Cruises Ltd. operates as a cruise company worldwide. The company operates cruises under the Royal Caribbean International, Celebrity Cruises, and Silversea Cruises brands, which comprise a range of itineraries. As of February 13, 2023, it operated 64 ships. The company was founded in 1968 and is headquartered in Miami, Florida.
Guest Growth: The company served 2.3 million guests in Q2FY25, up 10% year-over-year, highlighting robust demand and higher customer volumes
Net Income Growth: Net income rose to USD 1.2 billion in Q2FY25, up from USD 0.9 billion in Q2FY24, reflecting a 33% year-over-year increase
Higher Capital Expenditures: CapEx for 2025 is expected at USD 5 billion, significantly elevated due to new ship orders and destination projects, adding pressure on cash outflows
Cost Increase: NCC excluding fuel per APCD increased 2.5% as-reported, reflecting higher underlying operational costs compared to the prior year
Royal Caribbean faces material risks from elevated capital expenditures, debt obligations, and exposure to volatile fuel costs, which may pressure margins despite strong demand trends
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 347.5 | 300.0 | 365.0 | 401.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Royal Caribbean Group Q2FY25 Earnings Performance: Royal Caribbean Group reported strong second-quarter results, with Earnings per Share (EPS) of USD 4.41 and Adjusted EPS of USD 4.38, both exceeding prior guidance. The outperformance was attributed to robust close-in demand, lower costs due to timing shifts, and favorable contributions from TUI Cruises along with reduced net interest expenses. Following these results, the company increased its full-year 2025 Adjusted EPS guidance to a range of USD 15.41 to USD 15.55.
Revenue and Profitability Growth: The company generated total revenues of USD 4.5 billion in Q2FY25, alongside Net Income of USD 1.2 billion, up from USD 0.9 billion in Q2FY24. Adjusted EBITDA reached USD 1.9 billion. Load factor stood at 110%, reflecting strong occupancy rates, while Gross Margin Yields rose 11.0% year-over-year and Net Yields increased 5.3% as-reported (5.2% in constant currency). The yield growth was driven by balanced contributions from both new ships and existing fleet performance, supported by higher ticket pricing and increased onboard spending.
Cost Management and Efficiency: Gross Cruise Costs per Available Passenger Cruise Days (APCD) increased marginally by 0.8% as-reported, while Net Cruise Costs (NCC) excluding fuel per APCD rose 2.5% as-reported (2.1% in constant currency). Importantly, cost growth was 180 basis points better than the company’s guidance, largely due to the timing of certain operating expenses being shifted into the second half of the year. Additionally, lower net interest expenses and TUI Cruises’ outperformance provided further support to earnings.
Outlook and Bookings Momentum: Looking ahead, Royal Caribbean expects Net Yields to increase 3.5% to 4.0% in FY25, with NCC ex-fuel per APCD rising modestly by 0.5% as-reported. Bookings remain strong across all key markets, with close-in demand accelerating since the last earnings call. The company highlighted robust performance for its upcoming new ships—Star of the Seas and Celebrity Xcel—as well as its new land-based initiative, Royal Beach Club Paradise Island, which has seen strong early demand.
Liquidity and Capital Position: As of June 30, 2025, liquidity stood at USD 7.1 billion, inclusive of cash, cash equivalents, and available credit facilities. The company recently strengthened its balance sheet, securing investment-grade ratings from all three major credit agencies and upsizing its revolving credit facilities to USD 6.4 billion. Scheduled debt maturities are USD 0.8 billion in 2025, USD 2.9 billion in 2026, USD 2.6 billion in 2027, and USD 3.1 billion in 2028, reflecting a manageable but significant debt repayment schedule.
Strategic Investments and Capacity Expansion: Capital expenditures for 2025 are projected at USD 5 billion, primarily allocated to new ships and destination projects, with USD 1.6 billion earmarked for non-new ship initiatives. Capacity growth is expected at 5.5% for 2025, with further increases of 6% in 2026, 5% in 2027, and 6% in 2028. These expansions align with the company’s long-term strategy to enhance guest experiences, deepen customer loyalty, and capture a larger share of the USD 2 trillion global vacation market.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Royal Caribbean Group (NYSE: RCL) at the current market price of USD 347.5, as on August 26, 2025 at 7:15 am PDT.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Consumer Cyclical Industry: Travel Services
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| RCL Royal Caribbean Cruises Ltd |
2.90 1.02% | 287.78 | 39.09 | 13.19 | 2.35 | 7.00 | 3.87 | 13.19 |
| BKNG Booking Holdings Inc |
0.72 0.01% | 5341.70 | 35.09 | 24.51 | 7.44 | 34.95 | 7.43 | 21.81 |
| ABNB Airbnb Inc |
-0.07 0.05% | 133.71 | 47.66 | 29.85 | 7.91 | 10.08 | 7.06 | 32.53 |
| TCOM Trip.com Group Ltd ADR |
-0.2 0.28% | 71.65 | 23.73 | 16.29 | 0.91 | 2.30 | 5.84 | 18.29 |
| CCL Carnival Corporation |
0.12 0.41% | 28.14 | 21.70 | 15.65 | 1.39 | 4.15 | 2.63 | 10.93 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is August 26,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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