Royal Caribbean reported 13% year-over-year revenue growth in the fourth quarter of 2025 and a 72% increase in adjusted EPS compared with the same period a year ago. Adjusted EPS matched analyst forecasts at $2.80, while total revenues reached $4.26 billion. Net leverage stood at 2.92x at quarter end, well below the peer group average, and gross margin yields rose 9.2% as-reported. Despite the robust performance, shares now trade at roughly 22x free cash flow, positioning the stock as fairly valued and earning a ‘hold’ rating from our analysts.

Management issued guidance for 2026 that exceeds consensus: double-digit growth in both revenue and adjusted EPS, with capacity up approximately 6.7% year-over-year. Approximately two-thirds of 2026 capacity is already booked at record pricing levels, driven by the highest seven-week booking stretch in company history during the recent WAVE season. First quarter 2026 adjusted EPS is forecast between $3.18 and $3.28, supported by net yield improvement of 2.4% to 2.9% as-reported and ongoing close-in reservations at premium rates.

Royal Caribbean has committed to two firm orders for its next-generation Discovery Class ships, with options for four additional vessels, the first of which will debut in 2029. Celebrity River Cruises will double its river fleet to 20 ships by 2031. The company plans to invest $5 billion in new initiatives over the next three years, including exclusive land-based destinations and digital enhancements to its loyalty ecosystem. This multiyear capital plan underpins the Perfecta program targeting 20% EPS CAGR through 2027 and high-teens ROIC by the same year.