Royal Caribbean Cruises (RCL): Evaluating Valuation Following Waterslide Safety Closures and Operational Disruption

Royal Caribbean Cruises (RCL) shares have slipped this month, as the company temporarily shut down waterslides on several ships for safety repairs in response to a recent passenger injury and ensuing safety reviews.

See our latest analysis for Royal Caribbean Cruises.

The waterslide shutdowns have put a spotlight on Royal Caribbean Cruises' operational risks, sparking a 16.6% slide in its share price over the past month and weighing on short-term momentum. Still, when looking at the bigger picture, the business has delivered a strong 11.2% total shareholder return for the year and an incredible 361% over the past three years. This shows that long-term holders have been well rewarded even through occasional setbacks.

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So with Royal Caribbean now trading at a notable discount to analyst price targets and recent growth still strong, investors might wonder if this offers a genuine buying opportunity or if future upside is already reflected in the current price.

Most Popular Narrative: 21.6% Undervalued

Royal Caribbean Cruises' most popular narrative points to a fair value that sits materially above the last close price, flagging the possibility of an overlooked opportunity by the market. The narrative uses robust future earnings expectations and a rigorous discount rate to underpin this valuation.

The introduction of new ships like Star of the Seas and Celebrity Xcel, coupled with existing fleet performance, is expected to drive yield growth between 2.6% and 4.6% in 2025, positively impacting revenue and earnings. Enhanced guest experiences, investments in private destinations, and new ships are driving higher onboard spending and pre-cruise purchases, which should support revenue growth by increasing per-passenger spend.

Read the complete narrative.

Want to know what’s fueling excitement about Royal Caribbean’s future? There are bold revenue and profit projections along with expanding margins that could change how you look at growth in the cruise industry. Curious which financial drivers analysts say justify this valuation? Dive into the narrative to see the surprising numbers for yourself.

Result: Fair Value of $336.78 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising economic uncertainty and a potential pullback in consumer spending could quickly dampen Royal Caribbean’s upbeat growth outlook.

Find out about the key risks to this Royal Caribbean Cruises narrative.

Build Your Own Royal Caribbean Cruises Narrative

If you have a different perspective or like to rely on your own research, you can put together your own view of the story in just a few minutes with Do it your way.

A great starting point for your Royal Caribbean Cruises research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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