RCL Stock Forecast & Price Target

Royal Caribbean Group has demonstrated strong financial performance, with a significant increase in Return on Capital (ROC) from 13.80% to 15.40% over the last twelve months (LTM), and a forecasted increase to 18.03% in the near term. Additionally, the company's net sales revenue rose by 12.10% year-over-year, from $15.33 billion to $17.18 billion, indicating robust demand in the cruise industry. Furthermore, Economic Profit (EP) saw a remarkable 31.64% year-over-year growth, climbing from $1.19 billion to $1.57 billion, underscoring the company’s effective operational efficiency and profitability improvements.

Royal Caribbean has faced several adverse conditions that contribute to a negative outlook for the company’s stock, including a $0.05 headwind to FY25 EPS due to adverse weather and political unrest impacting operations. Management has revised guidance for FY25 adjusted EPS targets to a growth of only 32% year-over-year, while suggesting anemic cost growth in FY26 amid significant capacity expansion and the introduction of new private destinations. Furthermore, new ship deliveries are expected to negatively impact yields in the latter half of FY25, as each new ship requires a ramp-up period that tends to lower load factors initially.