RCL Leaps 6.0% In One Day, Should You Buy The Stock?

We believe there is not much to fear in RCL stock given its overall Strong operating performance and financial condition. This is aligned with the stock’s High valuation because of which we think it is Fairly Priced. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $94 Bil in market cap, Royal Caribbean provides global cruise vacations through multiple premium brands, offering diverse travel experiences since 1968, headquartered in Miami, Florida.

[1] Valuation Looks High

This table highlights how RCL is valued vs broader market. For more details see: RCL Valuation Ratios

[2] Growth Is Very Strong

• Royal Caribbean has seen its top line grow at an average rate of 65.4% over the last 3 years
• Its revenues have grown 12% from $15 Bil to $17 Bil in the last 12 months
• Also, its quarterly revenues grew 10.4% to $4.5 Bil in the most recent quarter from $4.1 Bil a year ago.

This table highlights how RCL is growing vs broader market. For more details see: RCL Revenue Comparison

[3] Profitability Appears Very Strong

• RCL last 12 month operating income was $4.5 Bil representing operating margin of 26.4%
• With cash flow margin of 33.4%, it generated nearly $5.7 Bil in operating cash flow over this period
• For the same period, RCL generated nearly $3.6 Bil in net income, suggesting net margin of about 21.0%

This table highlights how RCL profitability vs broader market. For more details see: RCL Operating Income Comparison

[4] Financial Stability Looks Strong

• RCL Debt was $20 Bil at the end of the most recent quarter, while its current Market Cap is $94 Bil. This implies Debt-to-Equity Ratio of 21.1%
• RCL Cash (including cash equivalents) makes up $735 Mil of $39 Bil in total Assets. This yields a Cash-to-Assets Ratio of 1.9%

[4] Downturn Resilience Is Weak

RCL has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• RCL stock fell 67.7% from a high of $96.98 on 2 June 2021 to $31.28 on 14 July 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 21 June 2023
• Since then, the stock increased to a high of $352.84 on 23 July 2025 , and currently trades at $344.67

 
2020 Covid Pandemic

• RCL stock fell 83.5% from a high of $135.05 on 17 January 2020 to $22.33 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 20 March 2024

 
2008 Global Financial Crisis

• RCL stock fell 88.0% from a high of $45.84 on 2 February 2007 to $5.50 on 2 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 21 December 2010

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read RCL Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.