Here's Why We Think Royal Caribbean Cruises (NYSE:RCL) Might Deserve Your Attention Today

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Royal Caribbean Cruises (NYSE:RCL). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

Check out our latest analysis for Royal Caribbean Cruises

Royal Caribbean Cruises' Improving Profits

Royal Caribbean Cruises has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. Impressively, Royal Caribbean Cruises' EPS catapulted from US$3.60 to US$9.68, over the last year. Year on year growth of 169% is certainly a sight to behold.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Royal Caribbean Cruises shareholders can take confidence from the fact that EBIT margins are up from 18% to 25%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Royal Caribbean Cruises' future profits.

Are Royal Caribbean Cruises Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$66b company like Royal Caribbean Cruises. But we are reassured by the fact they have invested in the company. Notably, they have an enviable stake in the company, worth US$230m. We note that this amounts to 0.4% of the company, which may be small owing to the sheer size of Royal Caribbean Cruises but it's still worth mentioning. So despite their percentage holding being low, company management still have plenty of reasons to deliver the best outcomes for investors.

Does Royal Caribbean Cruises Deserve A Spot On Your Watchlist?

Royal Caribbean Cruises' earnings per share growth have been climbing higher at an appreciable rate. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So based on this quick analysis, we do think it's worth considering Royal Caribbean Cruises for a spot on your watchlist. We should say that we've discovered 3 warning signs for Royal Caribbean Cruises (1 is significant!) that you should be aware of before investing here.

Although Royal Caribbean Cruises certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of companies that not only boast of strong growth but have strong insider backing.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.