Is Royal Caribbean Cruises Ltd (RCL) overvalued?
On Equity Rank's model estimate, RCL trades 24% above its fair value. Royal Caribbean Cruises Ltd (RCL) last closed at $327.16; the multi-method model fair value is $263.64.
| Price | Model fair value | Price vs model |
|---|---|---|
| $327.16 | $263.64 | 24% above |
What the answer rests on
- 2 of 10 valuation methods put RCL's value above its price and 8 put it below, so the methods mostly agree.
- To justify today's price, RCL's free cash flow would need to grow about 28.4% a year for ten years (a reverse discounted cash flow).
- RCL trades at 19.7 times its last year's earnings, against a median of 19.3 for 72 profitable Consumer Discretionary companies.
- Over the past year the price sat below the model fair value on 1% of trading days. The gap ranged from 5% below to 41% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind RCL's fair value · What prices assume · Other companies