Royal Caribbean Cruises Ltd (NYSE: RCL)

Sector: Consumer Cyclical Industry: Travel Services CIK: 0000884887
Market Cap 87.73 Bn
P/B 8.74
P/E 20.55
P/S 4.89
ROIC (Qtr) 14.03
Div Yield % 1.08
Rev 1y % (Qtr) 13.27
Total Debt (Qtr) 22.04 Bn
Debt/Equity (Qtr) 2.20
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About

Investment thesis

Bull case

  • Operating cash flow of 6.46B provides exceptional 281.09x coverage of minority interest expenses 23M, showing strong core operations.
  • Operating cash flow of 6.46B provides strong 36.94x coverage of stock compensation 175M, indicating sustainable incentive practices.
  • Strong operating cash flow of 6.46B provides 2.91x coverage of SG&A expenses 2.22B, showing efficient operational cost management.
  • Tangible assets of 40.81B provide robust 5.21x coverage of other current liabilities 7.83B, indicating strong asset backing.
  • Operating cash flow of 6.46B fully covers other non-current liabilities 554M by 11.67x, showing strong long-term stability.

Bear case

  • Operating cash flow of 6.46B barely covers its investment activities of (5.01B), with a coverage ratio of -1.29, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 6.46B provides thin coverage of dividend payments of (824M) with a -7.85 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 1.24B provides weak coverage of capital expenditures of 5.23B, with a 0.24 ratio suggesting additional external financing needs for growth initiatives.
  • Operating cash flow of 6.46B is outpaced by equity issuance of (1.16B) (-5.58 ratio), indicating concerning reliance on equity markets for funding operations.
  • Retained earnings of 5.92B provide limited buffer against comprehensive income items of (604M), which is -9.81x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Travel Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 BKNG Booking Holdings Inc. 176.65 Bn 51.94 12.17 17.53 Bn
2 RCL Royal Caribbean Cruises Ltd 87.73 Bn 20.55 4.89 22.04 Bn
3 ABNB Airbnb, Inc. 76.08 Bn 30.30 6.22 2.00 Bn
4 CCL Carnival Corp 42.95 Bn 15.56 1.61 27.99 Bn
5 TCOM Trip.com Group Ltd 36.86 Bn 8.42 4.39 4.49 Bn
6 VIK Viking Holdings Ltd 34.07 Bn 35.81 5.56 5.65 Bn
7 EXPE Expedia Group, Inc. 25.13 Bn 19.42 1.71 6.42 Bn
8 NCLH Norwegian Cruise Line Holdings Ltd. 10.73 Bn 16.17 1.11 14.52 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.60 1.63
EV to Cash from Ops. EV/CFO 16.75 25.22
EV to Debt EV to Debt 4.91 0.32
EV to EBIT EV/EBIT 20.27 8.12
EV to EBITDA EV/EBITDA 16.33 8.69
EV to Free Cash Flow [EV/FCF] EV/FCF 87.60 16.59
EV to Market Cap EV to Market Cap 1.23 0.91
EV to Revenue EV/Rev 6.04 3.15
Price to Book Value [P/B] P/B 8.74 -22.19
Price to Earnings [P/E] P/E 20.55 47.79
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 5.18 -2.21
Dividend Payout Ratio % Div Payout % (Qtr) 22.20 29.35
Dividend per Basic Share Div per Share (Qtr) 3.50 2.51
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 77.23 7.02
Interest Coverage Int. cover (Qtr) 5.39 2.13
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -60.01 -26.27
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 112.63 879.96
Dividend Growth (1y) % Div 1y % (Qtr) 268.42 17.96
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 17.99 221.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 16.16 -4.91
EBIT Growth (1y) % EBIT 1y % (Qtr) 18.37 195.76
EBT Growth (1y) % EBT 1y % (Qtr) 48.82 69.12
EPS Growth (1y) % EPS 1y % (Qtr) 43.18 153.49
FCF Growth (1y) % FCF 1y % (Qtr) -38.11 40.03
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 13.02 101.51
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.43 0.39
Cash Payout Ratio Cash Payout (Qtr) 0.07 0.03
Cash Ratio Cash Ratio (Qtr) 0.07 0.43
Current Ratio Curr Ratio (Qtr) 0.18 1.11
Debt to Equity Ratio Debt/Equity (Qtr) 2.20 -5.94
Interest Cover Ratio Int Coverage (Qtr) 5.39 2.13
Times Interest Earned Times Interest Earned (Qtr) 5.39 2.13
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 39.40 -25.59
EBIT Margin % EBIT Margin % (Qtr) 29.79 -3.90
EBT Margin % EBT Margin % (Qtr) 24.25 -33.52
Gross Margin % Gross Margin % (Qtr) 49.40 52.98
Net Profit Margin % Net Margin % (Qtr) 23.80 -35.95