Critical Review: Royal Caribbean Cruises (RCL) & The Competition

Royal Caribbean Cruises (NYSE: RCL) is one of 24 public companies in the “Water transportation” industry, but how does it contrast to its peers? We will compare Royal Caribbean Cruises to similar businesses based on the strength of its dividends, institutional ownership, analyst recommendations, valuation, earnings, risk and profitability.

Analyst Ratings

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This is a summary of current ratings for Royal Caribbean Cruises and its peers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Caribbean Cruises 1 3 10 0 2.64
Royal Caribbean Cruises Competitors 234 772 1136 37 2.45

Royal Caribbean Cruises currently has a consensus price target of $137.36, indicating a potential upside of 17.44%. As a group, “Water transportation” companies have a potential upside of 13.02%. Given Royal Caribbean Cruises’ stronger consensus rating and higher possible upside, analysts clearly believe Royal Caribbean Cruises is more favorable than its peers.

Valuation & Earnings

This table compares Royal Caribbean Cruises and its peers top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Royal Caribbean Cruises $8.78 billion $1.63 billion 15.53
Royal Caribbean Cruises Competitors $2.48 billion $323.23 million -1.91

Royal Caribbean Cruises has higher revenue and earnings than its peers. Royal Caribbean Cruises is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Royal Caribbean Cruises and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Royal Caribbean Cruises 18.51% 16.22% 7.35%
Royal Caribbean Cruises Competitors -0.68% 4.01% 1.63%

Institutional & Insider Ownership

74.5% of Royal Caribbean Cruises shares are owned by institutional investors. Comparatively, 64.1% of shares of all “Water transportation” companies are owned by institutional investors. 15.3% of Royal Caribbean Cruises shares are owned by company insiders. Comparatively, 6.0% of shares of all “Water transportation” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Royal Caribbean Cruises pays an annual dividend of $2.40 per share and has a dividend yield of 2.1%. Royal Caribbean Cruises pays out 31.9% of its earnings in the form of a dividend. As a group, “Water transportation” companies pay a dividend yield of 4.1% and pay out 74.6% of their earnings in the form of a dividend. Royal Caribbean Cruises has increased its dividend for 6 consecutive years.

Volatility & Risk

Royal Caribbean Cruises has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500. Comparatively, Royal Caribbean Cruises’ peers have a beta of 1.16, suggesting that their average share price is 16% more volatile than the S&P 500.

Summary

Royal Caribbean Cruises beats its peers on 13 of the 15 factors compared.

Royal Caribbean Cruises Company Profile

Royal Caribbean Cruises Ltd. operates as a cruise company. The company operates cruises under the Royal Caribbean International, Celebrity Cruises, and Azamara Club Cruises brands. The Royal Caribbean International brand provides itineraries to destinations worldwide, including Alaska, Asia, Australia, Bahamas, Bermuda, Canada, the Caribbean, Europe, the Panama Canal, and New Zealand with cruise lengths that range from 2 to 23 nights. The Celebrity Cruises brand offers itineraries to destinations, such as Alaska, Asia, Australia, Bermuda, Canada, the Caribbean, Europe, the Galapagos Islands, Hawaii, India, New Zealand, the Panama Canal, and South America with cruise lengths ranging from 2 to 19 nights. The Azamara Club Cruises brand offers cruise itineraries ranging from 4 to 21 nights to destinations, including Asia, Australia/New Zealand, Northern and Western Europe, the Mediterranean, Central and North America, and the less-traveled islands of the Caribbean. As of December 31, 2017, the company operated 49 ships with itineraries ranging from 2 to 23 nights to approximately 540 destinations. Royal Caribbean Cruises Ltd. was founded in 1968 and is headquartered in Miami, Florida.

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