Royal Caribbean surges on record bookings, upbeat 2026 outlook
Cruise operator posts 72% earnings jump and issues guidance above analyst expectations as WAVE season drives historic demand
Royal Caribbean Group reported fourth-quarter earnings that topped analyst expectations and issued 2026 guidance above Wall Street consensus, as the cruise operator experiences record demand during its critical WAVE booking season.
The Miami-based company reported adjusted earnings per share of $2.80 for the quarter, a 72% increase from $1.63 a year earlier, matching analyst expectations. For the full year, adjusted EPS reached $15.64, exceeding the company's guidance range. Royal Caribbean projects adjusted EPS between $17.70 and $18.10 for 2026, above the consensus estimate of $17.66.
The company's stock has reflected the strong performance, trading at $291.60 with a market capitalization of $79.2 billion. Analysts maintain a predominantly bullish outlook, with 16 firms rating the shares a buy and four assigning strong buy recommendations, according to market data. The average 12-month price target stands at approximately $335, though Stifel recently lowered its target from $400 to $380 while maintaining a buy rating.
"2025 was an outstanding year, and the momentum is further accelerating into 2026," said Jason Liberty, chairman and chief executive officer, in the earnings release. The company recorded its highest seven booking weeks in history during the cyber sales period and the start of WAVE season, the peak booking period that typically occurs in the first quarter of the year.
Royal Caribbean has already secured approximately two-thirds of its 2026 capacity at record rates, positioning it within historical booking ranges. Guest spending continues to outpace previous years, with nearly 50% of onboard revenue in 2025 booked pre-cruise and 90% of those purchases made through digital channels. The proportion of booked guests who have made pre-cruise purchases for 2026 has already increased year-over-year.
The company's pricing power was evident in its yield metrics. Gross margin yields increased 9.2% in the fourth quarter and 8.5% for the full year, while net yields rose 3.1% in the quarter and 3.8% for the year. The load factor, a measure of occupancy, reached 108% for the fourth quarter, indicating strong demand for available cruise capacity. Total revenue for the quarter reached $4.3 billion, while full-year revenue totaled $17.9 billion.
For 2026, the company expects net yields to increase between 2.1% and 4.1%, with capacity growing 6.7%. The guidance includes a 30 basis point headwind from itinerary modifications in China. Liberty said the company anticipates "another strong year of financial performance with both revenue and earnings growing double digits" and remains on track to achieve its "Perfecta" goals by 2027.
Capital expenditures for 2026 are expected to be approximately $5 billion, supporting the company's growth initiatives including the new Discovery Class for Royal Caribbean, expansion of Celebrity River Cruises, and five new exclusive destinations by 2028. The company repurchased 1.8 million shares for $504 million in the fourth quarter and has $1.8 billion remaining under its existing share repurchase authorization after completing a $1 billion program in February 2025.
Despite the positive momentum, some analysts have expressed caution. Zacks currently assigns Royal Caribbean a "sell" rating, noting that there have been 20 downward EPS revisions and 18 downward revenue revisions over the past three months. The stock has traded between $162.49 and $364.14 over the past year, reflecting the volatility that has characterized the sector's post-pandemic recovery.
Royal Caribbean operates three brands—Royal Caribbean International, Celebrity Cruises, and Silversea Cruises—and has been focusing on creating what Liberty calls a "single vacation ecosystem" to attract new guests and drive repeat engagement. The company's forward price-to-earnings ratio of 16.29 suggests investors are pricing in continued growth, though below the trailing multiple of 19.55, indicating expectations for earnings acceleration in 2026.