Royal Caribbean Raises 2026 Earnings Guidance Amid Caribbean Demand

Royal Caribbean Cruises Ltd. (RCL) raised its full-year adjusted earnings guidance to a range of $17.73 to $17.87 per share, up from the prior projection of $17.10 to $17.50, as the company projects a 9% rise in 2026 revenues. The cruise line attributes this outlook to resilient vacation demand, strong pricing, and higher guest spending, particularly in the Caribbean region. Zacks Investment Research notes that the stock has advanced 12.1% in the past month, outperforming the Zacks Leisure and Recreation Services industry's 2.7% rise and the S&P 500's 0.9% gain.

The company expects net yields to increase between 2.35% and 2.85% as reported, and between 1.75% and 2.25% in constant currency. Capacity is slated to grow by 6.6%, supported by capital expenditures of approximately $4.7 billion. Royal Caribbean ended the second quarter with $6.9 billion in liquidity and leverage below 3x, having returned more than $600 million to shareholders through dividends and share repurchases.

Operational growth is being driven by fleet expansion and destination investments, including the deployment of Legend of the Seas to Europe and the development of Royal Beach Club Paradise Island and Perfect Day at CocoCay. Loyalty initiatives have also gained traction, with Points Choice and Status Match generating more than 500,000 new enrollments and Royal ONE exceeding expectations for sign-ups and cardholder spending. Over 90% of guests now use the company's app, which is being expanded to include personalized recommendations to drive further engagement.

Near-term pressures remain from the prolonged Middle East conflict, which has modestly affected bookings for select European itineraries and contributed to higher air-travel costs that favor closer destinations. With Europe accounting for approximately 28% of planned third-quarter capacity, Royal Caribbean expects third-quarter net yields to remain roughly flat. The company estimates that timing shifts for new ships and dry docks will suppress third-quarter yields by about 200 basis points, a drag that should reverse into a tailwind for the fourth quarter.

Cost management remains a focus, with second-quarter net cruise costs per available passenger cruise day excluding fuel increasing 3.9% year over year, a figure approximately 90 basis points below guidance due to expense timing shifts. The full-year outlook for unit costs excluding fuel remains flat, though fuel-price volatility persists with projected 2026 fuel expense of approximately $1.3 billion; as of the second quarter, 58% of remaining expected fuel consumption was hedged.

Valuation metrics show RCL trading at a forward 12-month price-to-sales ratio of 3.63X, above the industry average of 2.60X and significantly higher than Carnival Corporation Ltd. (CCL) at approximately 1.25X and Norwegian Cruise Line Holdings Ltd. (NCLH) at approximately 0.67X. Zacks Investment Research assigns RCL a Rank #3 (Hold), suggesting existing investors retain the stock while prospective buyers wait for a more attractive entry point.