RCL
Royal Caribbean Cruises Ltd.
$285.37
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 51.9% above fair value
You pay
$285.37
Bear
$85.38
Fair
$187.86
Bull
$294.67
Bear
$85.38
-70.1%
8% stage 1 growth, 12% discount
Fair
$187.86
-34.2%
13% stage 1 growth, 12% discount
Bull
$294.67
+3.3%
16% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (13% base case)
Terminal Value % of EV
37%
Implied Market Multiple
45.3x
Market is pricing in (growth)
22.0%
vs 12.5% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $346.86 from 52 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $187.86 per share.
Warnings
Wall Street's average price target is $346.86 (from 52 analysts). Our estimate is 71% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions