Time To Buy Royal Caribbean Stock?
Royal Caribbean stock’s (NYSE: RCL) 12% year-to-date decline is a notable contrast to the S&P 500 index’s 5% decline. The broader cruise line sector has been under substantial pressure, with Norwegian Cruise Line plummeting 26%, Carnival Corp retreating 19%, and Viking Holdings dropping 12%.
The cruise industry’s decline is attributed to the Trump administration’s tax evasion crackdown. The administration’s plans to target tax-avoiding cruise lines, which register vessels in low-tax jurisdictions like Liberia and Panama, have sparked concerns. Additionally, Royal Caribbean recently faced a CDC inspection setback, citing food storage, hygiene, and outbreak handling concerns, which the company has pledged to address.
Royal Caribbean’s stock has been volatile, ranging from $125 to $277 over the past year. However, the company has reported impressive growth, with revenues rising 19% year-over-year to $16.5 billion in FY 2024, and net income increasing a strong 71% to $2.9 billion. With strong financials, high occupancy rates, and expansion plans such as Celebrity River Cruising, Royal Caribbean looks well-positioned for investors.
That said, the company’s stock looks like a good pick but is still risky at its current price of around $205. We believe there are some minor concerns with RCL stock, which makes it risky despite its current valuation being moderate.
We arrive at our conclusion by comparing the current valuation of RCL stock with its operating performance over the recent years as well as its current and historical financial condition. Our analysis of Royal Caribbean along key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience shows that the company has a strong operating performance and financial condition, as detailed below. However, for investors who seek lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Separately, see Now Is Not The Time To Buy Starbucks Stock.
How does Royal Caribbean’s valuation look vs. the S&P 500?
Going by what you pay per dollar of sales or profit, RCL stock is currently valued in line with the broader market.
• Royal Caribbean has a price-to-sales (P/S) ratio of 4.0 vs. a figure of 3.2 for the S&P 500
• Additionally, the company’s price-to-operating income (P/EBIT) ratio is 16.0 compared to 24.3 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 12.5 vs. the benchmark’s 24.3
How have Royal Caribbean’s revenues grown over recent years?
Royal Caribbean’s Revenues have grown considerably over recent years.
• Royal Caribbean has seen its top line grow at an average rate of 184.3% over the last 3 years (vs. increase of 6.3% for S&P 500)
• Its revenues have grown 18.6% from $14 Bil to $17 Bil in the last 12 months (vs. growth of 5.2% for S&P 500)
• Also, its quarterly revenues grew 12.9% to $3.8 Bil in the most recent quarter from $3.3 Bil a year ago (vs. 5.0% improvement for S&P 500)
How profitable is Royal Caribbean?
Royal Caribbean’s profit margins are much higher than most companies in the Trefis coverage universe.
• Royal Caribbean’s Operating Income over the last four quarters was $4.1 Bil, which represents a high Operating Margin of 24.9% (vs. 13.0% for S&P 500)
• Royal Caribbean’s Operating Cash Flow (OCF) over this period was $5.3 Bil, pointing to a high OCF-to-Sales Ratio of 31.9% (vs. 15.7% for S&P 500)
Does Royal Caribbean look financially stable?
Royal Caribbean’s balance sheet looks weak.
• Royal Caribbean’s Debt figure was $21 Bil at the end of the most recent quarter, while its market capitalization is $54 Bil (as of 3/18/2025). This implies a moderate Debt-to-Equity Ratio of 31.7% (vs. 19.0% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $388 Mil of the $37 Bil in Total Assets for Royal Caribbean. This yields a very poor Cash-to-Assets Ratio of 1.1% (vs. 14.8% for S&P 500)
How resilient is RCL stock during a downturn?
RCL stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Inflation Shock (2022)
• RCL stock fell 61.0% from a high of $83.96 on 11 February 2022 to $32.75 on 15 July 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 6 June 2023
• Since then, the stock has increased to a high of $274.79 on 30 January 2025 and currently trades at around $205
Covid Pandemic (2020)
• RCL stock fell 78.1% from a high of $111.55 on 7 February 2020 to $24.39 on 3 April 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 4 December 2023
Global Financial Crisis (2008)
• RCL stock fell 86.9% from a high of $42.06 on 7 December 2007 to $5.50 on 2 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 21 December 2010
Putting all the pieces together: What it means for RCL stock
In summary, Royal Caribbean’s performance across the parameters detailed above are as follows:
• Growth: Extremely Strong
• Profitability: Very Strong
• Financial Stability: Very Weak
• Downturn Resilience: Weak
• Overall: Neutral
But keeping in mind its moderate valuation, we think that the stock is attractive, which supports our conclusion that RCL is a good stock to buy.
While RCL looks promising, you could explore the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
| Returns | Mar 2025 MTD [1] |
2025 YTD [1] |
2017-25 Total [2] |
| RCL Return | -17% | -12% | 170% |
| S&P 500 Return | -6% | -5% | 151% |
| Trefis Reinforced Value Portfolio | -5% | -7% | 558% |
[1] Returns as of 3/19/2025
[2] Cumulative total returns since the end of 2016
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