Royal Caribbean’s Rising Tide

Many years later, as the salt spray kissed the faces of those returning from distant shores, Old Man Tiberio would recall the year the sea began to favor the painted hulls of Royal Caribbean, a favor foretold not in charts or ledgers, but in the unusually vibrant bloom of algae along the Yucatan coast—a green premonition, he’d say, of fortunes about to swell. It was a time when the very air tasted of possibility, and the whispers of a new prosperity drifted on the trade winds, carrying with them the scent of polished brass and the distant laughter of passengers. This week, the company, a leviathan among cruise lines, has risen as if lifted by those same currents, its shares climbing a remarkable 16%—a testament not merely to quarterly earnings, but to a kind of maritime destiny.

The reports arrived, of course, filled with the usual cold pronouncements of Wall Street—record fourth-quarter earnings, a 13% surge in revenue, adjusted earnings per share leaping a startling 72%. But these numbers felt less like calculations and more like the inevitable unfolding of a long-foreseen plan, a reckoning of the sea’s bounty. They spoke of streamlining efficiencies, of course, but one could almost hear the shipwrights humming ancient songs as they shaped the company’s fate. Even the slight “miss” on Wall Street’s expectations seemed a mere formality, a fleeting shadow against the brilliance of the larger picture. The true revelation lay in the projections for 2026: a doubling of sales, an increase in capacity of nearly 7%, a promise of continued ascent on the waves of demand.

Jason Liberty, the company’s chief executive, announced with quiet certainty that the past seven weeks had been the best in the company’s history, a claim that echoed through the corridors of power like a forgotten sea shanty. These weren’t simply bookings; they were commitments, promises whispered into the wind, each reservation a tiny vessel setting sail toward a shared horizon. And as if to confirm this auspicious turn, net cruise costs, excluding the volatile price of fuel, had declined by 6%—a subtle blessing from the capricious gods of the ocean. The company, emboldened, now speaks of doubling its fleet of Celebrity River Cruises by 2031, and of investing a staggering $5 billion in new initiatives—a bold wager on the enduring allure of the sea.

For those who remember the storm of 2020—the year the world held its breath and the ships lay silent in the harbors—the current rise is nothing short of miraculous. The company’s stock, once battered and broken, has more than quintupled, yet still seems to float at a reasonable altitude. Last year, Royal Caribbean generated $6.3 billion in operating cash flow, a treasure trove accumulated from countless voyages. Even accounting for $1.8 billion in maintenance capex planned for 2026, the company trades at a modest 22 times free cash flow, relative to its $100 billion enterprise value. This, in a market often given to extravagance, is a price that suggests not reckless abandon, but a measured confidence. However, one must remember the sea’s inherent rhythm—its cycles of calm and tempest—and accept that even the most majestic vessel is subject to the whims of fate. To invest in Royal Caribbean is to embrace this cyclicality, to understand that the rising tide, however glorious, will eventually recede.

2026-01-29 22:52

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