QS Research · Michael Burry's Scion Capital analyst template · 2006
ROYAL CARIBBEAN CRUISES LTD (RCL)
As of 2026-11-09 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction medium · base case -27% · downside -28% · upside -27%
Q3 2026 was a beat-and-raise (Adjusted EPS $6.57; FY2026 guide $17.85-$17.95) and 2027 bookings are up high teens, but the price already capitalizes TTM EBITDA of $7.14B rather than cycle earnings. At today's 15.3x EV/EBITDA on my normalized FY2023-FY2025 EBITDA of $5.56B, EV is $85.1B and equity after $21.50B net debt is $63.6B, or about $238/share, 27% below $327.16. The market is missing that the normalized base, not the peak TTM print, is what a cyclical cruise operator should be valued on; using TTM EBITDA at 15.3x would roughly justify today's price. I keep the multiple at today's 15.3x because no dated filing, guidance, insider trade or balance-sheet event in the record supports a different multiple on normalized EBITDA. The result is watch, not short: base -27% is short of the -30% threshold and the downside case is -28%, while the long rule needs a downside no worse than -25%.
Key numbers
- Share price: $327.16
- Market cap: $87.51B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $19.14B
- EV / EBITDA (TTM): 15.3x
- P/E (TTM): 19.2x
- Price / book: 7.47x
The 15 boxes
- ✓ 1. Long-form business notes
Royal Caribbean is a single-business cruise operator with three global brands (Royal Caribbean, Celebrity, Silversea) plus land-based private destinations, and a 50% equity stake in TUI Cruises; it earned revenue by selling and delivering cruise vacations, with a stated focus on growing onboard revenue through digital channels. Scale rose from 61 ships / ~137,930 berths at Dec 31, 2020 (four brands, including Azamara) to 69 ships / ~179,720 berths at Dec 31, 2025. The six-year XBRL record shows the full cycle: revenue $1.53B and operating income -$3.87B in FY2021 versus revenue $17.93B and operating income $4.91B in FY2025, with operating cash flow of $6.46B and capex of $5.23B in FY2025 and the first buyback in the series ($1.16B). No 10-Q or earnings release is in the source set, so no TTM column can be shown here.
- ✓ 2. Competitive advantage
The advantage is scale and brand reach, not proven steady pricing power: 69 ships and 189,420 berths (including partner brands) serving more than 1,000 destinations in over 120 countries at 109.7% occupancy in FY2025, with 28 million loyalty-program members. The return history is violently cyclical — operating income of -$3.87B in FY2021 versus $4.91B in FY2025, on revenue of $1.53B versus $17.93B — so what the record shows is the ability to refill and re-price a fixed fleet after a shutdown, not a moat that holds margins flat. Competition is both cruise (Carnival's eight brands, Disney Cruise Line, MSC, Norwegian's three brands, Viking, Virgin Voyages) and land-based vacation alternatives, and the company discloses no market share, brand-level margin or ROIC against which to score the advantage.
- ✓ 3. 10-Q takeaways
Q3 2026 revenue rose 8.8% to $5.591 billion on 8.4% capacity growth and 112.4% occupancy; operating income was $1.871 billion (33.5% of revenue) and net income attributable to RCL was $1.728 billion. Nine-month operating cash flow was $5.3 billion, liquidity was $7.4 billion at September 30, 2026, and financing outflows included higher dividends and $380 million more share repurchases. Management guided FY2026 Adjusted EPS to $17.85-$17.95 and Q4 2026 to $3.48-$3.58, while the 10-Q said there were no material risk-factor changes from the 10-K.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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