How Realistic Are RCL's Perfecta Targets Given 2025 EPS Growth of 31%?

Royal Caribbean Cruises Ltd. RCL is entering a pivotal stage as its Perfecta financial plan gains momentum. Designed to deliver a 20% compound annual EPS growth rate through 2027 and return on invested capital in the high teens, Perfecta has become the company’s north star. With consumer demand for leisure travel surging and cruise vacations capturing a greater share of the $2 trillion global vacation market, RCL is uniquely positioned to execute on this ambitious blueprint.

Second-quarter 2025 results highlighted that trajectory. During the quarter, adjusted EPS came in at $4.38, a 36% year-over-year increase and $0.33 above guidance. Net yield climbed 5.2%, surpassing estimates, while load factor hit 110%. Onboard spend and pre-cruise purchases exceeded prior years, supported by a millennial and Gen Z demographic representing half of RCL’s guest base. Given the drivers, management now forecasts full-year EPS (earnings per share) growth of 31% year over year to a range of $15.41-$15.55, positioning RCL well ahead of its Perfecta pace.

Strategic investments are central to sustaining this growth arc. The launch of Star of the Seas and Celebrity Xcel is bolstering pricing power, while the debut of Royal Beach Club Paradise Island later this year underscores RCL’s destination-led strategy. The company is also expanding into new categories with river cruising and leveraging AI-powered personalization through its mobile platform, where nearly 50% of onboard purchases are now booked. These initiatives are deepening customer engagement and lifting loyalty-member bookings, which now account for nearly 40% of reservations.

Financially, RCL is translating demand into stronger fundamentals. Adjusted EBITDA margins reached 41% in the second quarter, up 300 basis points year over year, and operating cash flow came in at $1.7 billion. Liquidity as of second-quarter 2025 stands at $7.1 billion, with leverage on track to fall to the mid-2x range by year-end. With strong earnings growth, new ships and destinations coming online, and balance sheet strength improving, RCL remains confident in its ability to achieve its Perfecta milestones and drive long-term shareholder value.

RCL’s Price Performance, Valuation & Estimates

Shares of Royal Caribbean have rallied 36.3% in the past three months compared with the industry’s growth of 14.9%. In the same time frame, other industry players like Carnival Corporation & plc CCL, Norwegian Cruise Line Holdings Ltd. NCLH and OneSpaWorld Holdings Limited OSW have gained 30.5%, 33.9% and 17.5%, respectively.

RCLThree-Month Price Performance

Royal Caribbean stock is currently trading at a discount. The company is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 18.72X, below the industry average of 18.98X. Conversely, industry players, such as Carnival, Norwegian Cruise and OneSpaWorld have P/E multiples of 13.3X, 10.08X and 19.91X, respectively.

The Zacks Consensus Estimate for Royal Caribbean’s 2025 EPS has been revised upward, increasing from $15.42 to $15.60 over the past 60 days. This upward trend indicates strong analyst confidence in the stock’s near-term prospects.

The company is likely to report solid earnings, with projections indicating a 32.2% rise in 2025. Conversely, industry players like Carnival, Norwegian Cruise and OneSpaWorld are likely to witness a rise of 40.9%, 12.1% and 18.8% respectively, year over year in 2025 earnings.

RCL stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research