How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Royal Caribbean (RCL) ten years ago? It may not have been easy to hold on to RCL for all that time, but if you did, how much would your investment be worth today?
Royal Caribbean's Business In-Depth
With that in mind, let's take a look at Royal Caribbean's main business drivers.
Based in Miami and incorporated in 1985, Royal Caribbean Cruises is a cruise company. It owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. Additionally, it has 50% investment in a joint venture with TUI AG, which operates the brand TUI Cruises.
The company’s cruise brands primarily serve the contemporary, premium and deluxe segments of the cruise vacation industry, which also includes the budget and luxury segments. These brands operate 64 ships. The ships operate on a selection of diverse itineraries worldwide that include roughly 1,000 destinations on all seven continents.
The company reports revenues under the following segments — Passenger ticket revenues (65.5% of total revenues in 2022) and Onboard and other revenues (34.5%).
Across the company’s five brands, nearly 5.5 million guests sailed in 2022. By the end of 2022, 64 out of 75 ships returned to operations, representing more than 85% of its worldwide capacity. The company’s bookings improved sequentially by 2022-end. As of Dec 31, 2022, the company had nearly $4.2 billion in customer deposits.
In the third quarter of 2022, the company unveiled a three-year financial performance initiative - Trifecta Program, thereby articulating longer-term financial objectives. The program emphasizes on financial coordinates, including Adjusted EBITDA per APCD, Adjusted EPS and ROIC with an intent to achieve it by 2025-end. Under this program, the company expects to achieve a triple-digit adjusted EBITDA per APCD, exceeding the earlier record adjusted EBITDA per APCD of $87 in 2019. The company also expects to achieve double-digit adjusted earnings per share, exceeding the earlier record adjusted earnings per share of $9.54 in 2019. The company anticipates achieving a return on invested capital in the teens by the end of 2025.
Bottom Line
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Royal Caribbean ten years ago, you're likely feeling pretty good about your investment today.
A $1000 investment made in July 2013 would be worth $3,111.58, or a 211.16% gain, as of July 3, 2023, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
In comparison, the S&P 500 gained 177.06% and the price of gold went up 49.67% over the same time frame.
Looking ahead, analysts are expecting more upside for RCL.
Shares of Royal Caribbean have outperformed the industry in the past three months. The company is benefiting from strong demand for Caribbean itineraries, solid close-in bookings at higher prices and continued strength of onboard spend. Considering the extension of the WAVE season and solid pent-up demand, the company increased its 2023 guidance. It expects adjusted EPS to be $4.40-$4.80, up from the prior stated $3-$3.60. The company anticipates achieving a return on invested capital in the teens by the end of 2025 on account of its underlying strategies, robust secular and demographic trends, moderate capacity growth, moderate yield growth and strong cost discipline. Earnings estimates for 2023 have moved north in the past 30 days, depicting analysts’ optimism regarding the stock’s growth potential.
Over the past four weeks, shares have rallied 20.31%, and there have been 7 higher earnings estimate revisions in the past two months for fiscal 2023 compared to none lower. The consensus estimate has moved up as well.Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock And 4 Runners UpRoyal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
