RCL

Royal Caribbean Cruises Ltd

Consumer


Presented:09/27/2016
Price:$74.35
Cap:$16.07B
Current Price:$202.42
Cap:$52.11B

Presented

Date09/27/2016
Price$74.35
Market Cap$16.07B
Ent Value$24.38B
P/E Ratio21.3x
Book Value$37.84
Div Yield0.03%
Shares O/S216.13M
Ave Daily Vol2,501,749
Short Int8.24%

Current

Price$202.42
Market Cap$52.11B
Royal Caribbean Cruises Ltd. is a global cruise vacation company. It operates five wholly-owned brands Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises, Pullmantur and CDF Croisières de France. The company have a half of the investment in a joint venture with TUI AG which operates the brand TUI Cruises. These brands offer an array of onboard activities, services and amenities, including simulated surfing, swimming pools, sun decks, beauty salons, exercise and spa facilities, ice skating rinks, in-line skating, basketball courts, rock climbing walls, miniature golf courses, gaming facilities, lounges, bars, Las Vegas-style entertainment, cinemas and Royal Promenades, which include interior shopping, dining and an entertainment boulevard. Royal Caribbean Cruises was founded in 1968 and is headquartered in Miami, FL.

Publicly traded companies mentioned herein: Carnival Corp (CCL), Norwegian Cruise Line Holdings Ltd (NCLH), Royal Caribbean Cruises Ltd (RCL), Walt Disney Co (DIS)

Highlights

Shares of cruise companies have been among the largest decliners in the consumer discretionary sector year-to-date. The presenter is long Royal Caribbean (RCL) at this time ($71), and believes the company is in a better position than its peers to deal with the “legitimate” challenges facing the industry, namely concerns about bookings and pricing in the Caribbean, geopolitical risk and its impact on European travel, and a slowdown in China. However, at 9x - 10x forward earnings estimates there should be limited downside risk (to the high $60s) and “the bar for RCL to step over is low”. The stock could trade up to $90 if management executes and delivers results that are roughly in line with EPS guidance of $7 in 2017. Plus, there is optionality for shareholders if management chooses to exercise the balance sheet flexibility RCL appears to have.

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Idea Discussion

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