Royal Caribbean Cruises Ltd.RCL

Morningstar Rating

Stock Research and Analysis

by Warren Miller

Royal Caribbean is a large competitor in an industry that benefits from scale advantages. There are significant barriers to starting a cruise line, preventing additional competition and leaving Royal Caribbean with a narrow moat. The long-term prospects Read more

Bulls Say

Royal Caribbean owns some of the most well-known and respected cruise brands, making it an obvious choice for both novice and experienced cruisers.

Cruise industry dynamics are improving as the elderly population and cruise awareness continue to grow.

Compared with other types of vacations, cruises have the highest customer satisfaction and are a relative bargain for many vacationers. Read more

Bears Say

Royal Caribbean's free cash flow will suffer if fuel prices rise substantially.

Weather or acts of terrorism could prove to be a significant deterrent of potential cruise vacationers.

Scale benefits give cruise companies the incentive to constantly increase capacity. If the industry expands too quickly, excess capacity could hurt profitability. Read more

Strategy

Royal Caribbean plans to continue expanding its routes to destinations outside the Caribbean in an effort to diversify its product line and its customer base. By 2011 the company plans to launch seven Read more

Management

Richard D. Fain has been the chairman and CEO of Royal Caribbean since 1988. He and his management team have extensive experience, with an average tenure of more than 16 years at the company. However, we do believe that shareholders would be better Read more

Profile

Royal Caribbean is the second-largest cruise operator in the world and generated over $6.5 billion in revenue in 2008. The firm's 38 ships take passengers to more than 380 Read more

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