Stock Analysis on Net

Royal Caribbean Cruises Ltd. (NYSE:RCL)

This company has been moved to the archive! The financial data has not been updated since July 29, 2022.

Present Value of Free Cash Flow to Equity (FCFE) 

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.


Intrinsic Stock Value (Valuation Summary)

Royal Caribbean Cruises Ltd., free cash flow to equity (FCFE) forecast

US$ in thousands, except per share data

Microsoft Excel
Year Value FCFEt or Terminal value (TVt) Calculation Present value at 28.69%
01 FCFE0 -2,688,360
1 FCFE1 = -2,688,360 × (1 + 0.00%)
2 FCFE2 = × (1 + 0.00%)
3 FCFE3 = × (1 + 0.00%)
4 FCFE4 = × (1 + 0.00%)
5 FCFE5 = × (1 + 0.00%)
5 Terminal value (TV5) = × (1 + 0.00%) ÷ (28.69%0.00%)
Intrinsic value of Royal Caribbean Cruises Ltd. common stock
 
Intrinsic value of Royal Caribbean Cruises Ltd. common stock (per share) $—
Current share price $38.71

Based on: 10-K (reporting date: 2021-12-31).

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.


Required Rate of Return (r)

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.67%
Expected rate of return on market portfolio2 E(RM) 13.79%
Systematic risk of Royal Caribbean Cruises Ltd. common stock βRCL 2.63
 
Required rate of return on Royal Caribbean Cruises Ltd. common stock3 rRCL 28.69%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rRCL = RF + βRCL [E(RM) – RF]
= 4.67% + 2.63 [13.79%4.67%]
= 28.69%


FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Royal Caribbean Cruises Ltd., PRAT model

Microsoft Excel
Average Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in thousands)
Common stock dividends 163,089 618,843 546,689 463,069
Net income (loss) attributable to Royal Caribbean Cruises Ltd. (5,260,499) (5,797,462) 1,878,887 1,811,042 1,625,133
Revenues 1,532,133 2,208,805 10,950,661 9,493,849 8,777,845
Total assets 32,258,355 32,465,187 30,320,284 27,698,270 22,296,317
Shareholders’ equity 5,085,556 8,760,669 12,163,846 11,105,461 10,702,303
Financial Ratios
Retention rate1 0.67 0.70 0.72
Profit margin2 -343.34% -262.47% 17.16% 19.08% 18.51%
Asset turnover3 0.05 0.07 0.36 0.34 0.39
Financial leverage4 6.34 3.71 2.49 2.49 2.08
Averages
Retention rate 0.69
Profit margin -110.21%
Asset turnover 0.24
Financial leverage 3.42
 
FCFE growth rate (g)5 0.00%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Retention rate = (Net income (loss) attributable to Royal Caribbean Cruises Ltd. – Common stock dividends) ÷ Net income (loss) attributable to Royal Caribbean Cruises Ltd.
= (-5,260,4990) ÷ -5,260,499
=

2 Profit margin = 100 × Net income (loss) attributable to Royal Caribbean Cruises Ltd. ÷ Revenues
= 100 × -5,260,499 ÷ 1,532,133
= -343.34%

3 Asset turnover = Revenues ÷ Total assets
= 1,532,133 ÷ 32,258,355
= 0.05

4 Financial leverage = Total assets ÷ Shareholders’ equity
= 32,258,355 ÷ 5,085,556
= 6.34

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.69 × -110.21% × 0.24 × 3.42
= 0.00%


FCFE growth rate (g) forecast

Royal Caribbean Cruises Ltd., H-model

Microsoft Excel
Year Value gt
1 g1 0.00%
2 g2 0.00%
3 g3 0.00%
4 g4 0.00%
5 and thereafter g5 0.00%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5g1) × (2 – 1) ÷ (5 – 1)
= 0.00% + (0.00%0.00%) × (2 – 1) ÷ (5 – 1)
= 0.00%

g3 = g1 + (g5g1) × (3 – 1) ÷ (5 – 1)
= 0.00% + (0.00%0.00%) × (3 – 1) ÷ (5 – 1)
= 0.00%

g4 = g1 + (g5g1) × (4 – 1) ÷ (5 – 1)
= 0.00% + (0.00%0.00%) × (4 – 1) ÷ (5 – 1)
= 0.00%