Royal Caribbean (RCL): Evaluating Valuation After Multi-Year Shipbuilding Deal and Fleet Expansion Plans

Royal Caribbean Cruises (RCL) just grabbed headlines by signing a sweeping multi-year deal with Meyer Turku shipyard, locking in the company’s rights to build new cruise ships through 2036. The announcement not only extends an existing partnership, it also includes a firm order for a new Icon class ship, Icon 5, slated for delivery in 2028, as well as options for future fleet additions. This kind of long-term commitment is uncommon and sends a clear signal for anyone tracking Royal Caribbean’s next moves: management is focusing on innovation and growth, even as the industry evolves.

When news like this breaks, it is natural to check in on the stock’s journey. Over the past year, RCL has surged an impressive 86%, making it one of the top performers among consumer-focused travel stocks. That momentum has not been perfectly linear, as a dip of about 9% in the last month suggests shifting market expectations, even as strong gains over the past three months and year-to-date keep bulls interested. Additionally, recent updates on expanding the fleet and diversifying the vacation experience with new private beach clubs indicate Royal Caribbean is maintaining pressure on competitors and keeping investors curious about what comes next.

With shares up so sharply and new investments planned, the big question is whether the market is already pricing in all that future growth, or if there is still an opportunity here for buyers willing to ride the next wave.

Most Popular Narrative: 8% Undervalued

According to widely followed market narratives, Royal Caribbean Cruises is currently considered about 8% undervalued compared to its fair value estimate, when factoring in forward earnings and discount rates used by analysts. This suggests there may still be upside for investors who believe in the company’s long-term growth story.

Increasing investor optimism stems from the company’s optionality around land-based projects, which are viewed as accretive to the core business. Sector-wide tailwinds, such as resilient yields, favorable foreign exchange rates, and an improved industry outlook, are enhancing profitability expectations.

What is really fueling this optimism? The most popular narrative is built on bold projections for profit margins, topline growth, and a sustained jump in earnings year after year. Want to uncover the crucial number every bull is watching, and what significant changes could tip Royal Caribbean’s fair value even higher? Explore the valuation narrative to see what could propel this stock to new highs.

Result: Fair Value of $355.87 (UNDERVALUED)

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

However, ongoing macroeconomic uncertainty and a potential dip in consumer spending could quickly shift the outlook and put pressure on future revenue growth.

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

Another View: What Do Traditional Valuations Say?

While the first method points to Royal Caribbean being undervalued, a look at conventional valuation using its price-to-earnings ratio tells a more cautious story. This view suggests the shares might not be a bargain after all. Which approach will prove more accurate as market conditions shift?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Royal Caribbean Cruises to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Royal Caribbean Cruises Narrative

If you want to dig deeper or see things from a different angle, you can use your own data and insights to shape a narrative in just minutes, Do it your way.

A great starting point for your Royal Caribbean Cruises research is our analysis highlighting 3 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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