RCL Stock Sinks After Earnings—Is a Buying Opportunity Ahead?

Key Points

• Royal Caribbean beat Q3 EPS estimates but missed on revenue and issued soft guidance, sparking a post-earnings sell-off.
• Despite the drop, the company’s fundamentals remain strong, highlighted by a $1.4 billion debt reduction and plans to repay $3.3 billion this year.
• Technical indicators suggest more downside is possible, but oversold conditions and support near $325 could attract long-term buyers.

Royal Caribbean Cruises Ltd. NYSE: RCL stock is down 5.6% in midday trading after the company’s second-quarter earnings report. The company beat earnings per share (EPS) expectations of $4.04 by 34 cents, coming in at $4.38. That number was also 36% higher year-over-year.

However, revenue of $4.54 billion was just a tick under the $4.55 billion expected by analysts. The company’s earnings guidance also spooked investors. Royal Caribbean forecasts EPS between $5.55 and $5.65 per share for the upcoming quarter, which is lower than analysts’ estimates of $5.84.

Plus, Royal Caribbean is now estimating full-year EPS between $15.41 and $15.55. While that’s an 86-cent increase on the low end, the midpoint still trails the consensus estimate of $15.46.

But with RCL stock up more than 44% in 2025, investors were likely hoping for better numbers. The Royal Caribbean analyst forecasts on MarketBeat gave the stock a consensus price target of $311.05. Even with this pullback, RCL stock is still trading at around a 7% premium to consensus targets.

Was the Stock Priced for Perfection?

RCL stock trades at a price-to-earnings (P/E) ratio of more than 27x. That’s significantly higher than its historical average and above the sector average for consumer discretionary stocks. It’s also about twice as high as that of Norwegian Cruise Line Holdings Ltd. NYSE: NCLH and Carnival Corp. NYSE: CCL.

Royal Caribbean bulls may point out that the stock’s P/E ratio is better than that of Viking Holdings Inc. NYSE: VIK, which has shown similar growth to Royal Caribbean. However, VIK stock has only been publicly traded since 2024. The company has shown solid growth, but its market capitalization is about one-third of Royal Caribbean’s.

Also, while short interest is only about 5% of the overall float, it’s spiked over 20% in the last month, making the drop in RCL stock predictable.

The Fundamentals Still Look Strong

Perspective matters, and it might explain why RCL stock narrowed its losses by over 3% after the market opened. The company was disappointed with its earnings guidance, which could partly be due to Royal Caribbean’s plans to reduce debt.

Cruise lines are capital-intensive businesses. High leverage is common due to the cost of ships and infrastructure. However, Royal Caribbean’s debt-to-equity ratio of 2.21 is lower than that of its peers.

Plus, in the last quarter, the company repaid $1.4 billion in debt and plans to pay $3.3 billion for the full year.

In the short term, that would come at the expense of earnings. But over a longer period, that’s bullish for the stock, particularly if interest rates begin to come down later this year.

RCL Stock Could Have Further to Drop

This is to say that RCL stock may have further to fall. However, that could present investors on the sidelines with a more attractive entry point.

The stock has dipped below its 50-day simple moving average (SMA). That’s the first time this month that RCL stock has moved sharply against its trendline. The intraday recovery shows some buying interest, but the gap indicates a strong negative market reaction, likely driven by institutional buyers.

Bearish momentum is confirmed by the MACD, which shows a sharp crossover below the signal line.. However, with an RSI in the upper 30s, there could be a reason to believe the sell-off is overdone. After a sharp sell-off, the stock bounced off a low of around $325. In the short term, investors will want to see if the stock can sustain a price between $340 and $350, which could be a potential area of resistance.