Royal Caribbean (NYSE: RCL) is giving investors many more reasons to take a closer look. With third-quarter earnings approaching later this month, expectations for continued profit growth, fresh analyst upgrades, and a major investment in Sandals Resorts are putting the cruise operator back in calmer waters.
The company, whose cruise brands include Royal Caribbean International, Celebrity Cruises and Silversea, is scheduled to discuss its third-quarter results on October 27. Investors will be watching both its performance and what management says about the months ahead.
Earnings Expectations Remain Encouraging
Analysts expect Royal Caribbean to deliver quarterly earnings of $6.36 per share, up about 10.6% from adjusted earnings of $5.75 a year earlier. That would put the company at the upper end of its previously announced third-quarter adjusted earnings guidance of $6.26 to $6.36 per share.
The company has beaten consensus estimates in three of the past four quarters. Another strong result would help reinforce the argument that its business remains resilient despite concerns surrounding the travel industry.
The longer-term estimates also suggest the growth story has room to continue. Analysts expect earnings of $17.79 per share for fiscal 2026, compared with $15.64 in 2025. For 2027, expectations rise to $20.11 per share, representing another roughly 13% increase.
Deutsche Bank Sees an Overdone Selloff
Deutsche Bank analyst Chris Woronka upgraded the stock to Buy and assigned a $299 price target. Before that rebound, the stock had fallen more than 20% from its early-August peak. Higher oil prices and questions about cruise demand had made investors nervous.
Woronka’s argument is that those concerns have become too heavily reflected in the share price. He noted that fuel represents approximately 7% of revenue and pointed to encouraging results from competitors as evidence that travelers are still spending. The implication is that cruise operators may have some ability to offset higher expenses through stronger pricing.
That does not make fuel costs irrelevant. Even a relatively small expense category can meaningfully affect earnings when prices rise sharply. But the broader question is whether Royal Caribbean can generate enough additional revenue to absorb those pressures without sacrificing demand. If bookings and pricing hold up, investors may become more comfortable looking beyond the latest move in oil.
Sandals Adds Another Growth Opportunity
Royal Caribbean’s expansion beyond cruising is also attracting attention.
The company has agreed to invest about $3 billion for a 50% equity interest in the business comprising Sandals and Beaches Resorts. The transaction is expected to close in early 2027, subject to customary approvals and closing conditions. Royal Caribbean has secured committed debt financing for the investment.
Strategically, the appeal is easy to understand. A customer who enjoys cruising might prefer an all-inclusive resort for their next vacation. Exposure to both markets could give Royal Caribbean more opportunities to participate in that customer’s travel spending. It also broadens the company’s potential audience to include vacationers who prefer staying on land.
Jefferies analyst David Katz sees meaningful potential in the agreement. He upgraded Royal Caribbean to Buy from Hold and raised his price target to $330 from $305, implying nearly 17% upside from the Wednesday closing price referenced in his report.
Katz also increased his forecast for 2027 net-yield growth to 3.3% from 2.9%. Net yield broadly measures net cruise revenue relative to available passenger capacity, making it a useful indicator of revenue performance. His larger point is that Wall Street may be underestimating the earnings contribution from Sandals. If those expectations move higher, the shares could gain additional support.
What Investors Should Watch Next
The October report provides an opportunity to test the bullish case. Beyond earnings, watch management’s comments on future bookings, ticket pricing, onboard spending, and fuel expenses. Updates on Sandals financing and expected returns will also matter, especially given the additional borrowing involved.
Royal Caribbean has several potential drivers of further gains: growing profits, renewed analyst confidence, and a broader vacation business. However, the strongest argument for the stock will come from execution.
