Royal Caribbean Cruises (RCL): Examining Valuation After $1.5 Billion Debt Raise and Capital Structure Moves

Royal Caribbean Cruises (RCL) has just wrapped up a $1.5 billion offering of senior unsecured notes due 2036, setting the stage to fund the upcoming Celebrity Xcel ship and address existing debt. For investors, this move emphasizes the company’s improved access to capital and its intent to further strengthen its balance sheet.

See our latest analysis for Royal Caribbean Cruises.

Royal Caribbean Cruises has been making headlines, not just for its new $1.5 billion in debt financing, but also as it expands its fleet with game-changing ships and enhances onboard experiences like the first-ever two-story casino. Even with some recent turbulence, the company’s 1-year total shareholder return of nearly 8% points to persistent confidence in its long-term growth story, as momentum holds steady and new investments support a bullish outlook on future earnings.

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The latest debt transaction marks a clear inflection point for Royal Caribbean. However, when weighing the company’s upside against its multi-year rally, investors have to ask if there is real value left or if the market has already priced in robust growth ahead.

Most Popular Narrative: 11.8% Undervalued

With Royal Caribbean’s most popular narrative suggesting a fair value noticeably higher than its recent close, consensus forecasts offer a compelling snapshot of the company’s perceived upside. This narrative forms the foundation of market expectations and reveals the assumptions powering the latest valuation estimates.

Enhanced guest experiences, investments in private destinations, and new ships are driving higher onboard spending and pre-cruise purchases. These efforts should support revenue growth by increasing per-passenger spend.

Read the complete narrative.

Curious about what’s fueling the bullish target? Hint: the narrative leans on several ambitious forecasts for future revenue, margins, and guest spending power. But there is a twist in the assumptions you will want to see. Dive in and examine which numbers drive this valuation.

Result: Fair Value of $355.87 (UNDERVALUED)

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

However, persistent economic uncertainty and any pullback in discretionary spending could quickly challenge Royal Caribbean’s positive outlook and future growth assumptions.

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

Build Your Own Royal Caribbean Cruises Narrative

If you want to see the numbers differently or follow your own thesis, you can craft a unique outlook on Royal Caribbean using the same data in just a few minutes. Do it your way.

A great starting point for your Royal Caribbean Cruises research is our analysis highlighting 4 key rewards and 2 important warning signs 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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