Should You Buy Royal Caribbean Stock Before July 28?
Key Points
Royal Caribbean carries nearly $20 billion in long-term debt.
The company experienced record bookings and demand last year.
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The cruise industry has rebounded nicely post-pandemic, but Royal Caribbean Cruises (NYSE: RCL) stock is up just over 1% in 2026. With the second-quarter release imminent, should you buy the stock now?
The first-quarter results were great for Royal Caribbean. The cruise liner posted north of $4.5 billion in revenue, and its adjusted earnings per share soundly beat Wall Street's expectations. The second quarter should be much of the same, as bookings and margins remain high. The cost of fuel and shrinking consumer discretionary spending are the biggest threats to another great quarter and year for Royal Caribbean.
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The company also has a substantial level of debt, with nearly $20 billion in long-term liabilities. But as long as consumer spending and demand keep this current pace, Royal Caribbean will remain an industry leader.
Now could be a good time for investors on the sidelines to buy in, as Royal Caribbean is currently more than 20% below its 52-week high. The stock also pays a solid quarterly dividend of $1.50 per share, a yield just over 2%. The company's forward P/E is a reasonable 16.5, and its PEG sits around 1.3. These indicate the stock is fairly priced.
Image source: Getty Images.
The cruise industry is also cyclical, but Royal Caribbean seems to be doing everything it can to keep customers happy and coming back. The brand is expanding aggressively across the globe as well, with plans to add double-digit ships to its fleet, alongside new destinations. The brand's strength and current valuation make it a compelling stock to consider ahead of earnings on July 28.
Barring any major events, such as a pandemic or a severe economic downturn, Royal Caribbean is sailing on much smoother financial waters, and I'm cautiously bullish on the cruise liner's trajectory for the next several years.
Should you buy stock in Royal Caribbean Cruises right now?
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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