Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Royal Caribbean Cruises Ltd.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 10.0% to 2.0% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 29, DPO 44, DIO 13). At a 8.2% WACC with mid-year discounting, the terminal value (146% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 21.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $182.87 per share, suggesting RCL is overvalued by 33.4% at the current price of $274.73.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | -7,329 | -7,871 | -8,560 | -9,298 | -9,481 | -9,718 |
| (−) Net Interest | 4,934 | 5,298 | 5,762 | 6,259 | 6,382 | 6,541 |
| (+) D&A | 3,467 | 5,019 | 6,624 | 8,178 | 10,060 | 10,312 |
| EBITDA | 1,071 | 2,446 | 3,825 | 5,139 | 6,961 | 7,135 |
| (−) Tax | 0 | 0 | 0 | 0 | 0 | — |
| (−) CapEx | 9,993 | 10,731 | 11,671 | 12,677 | 12,926 | — |
| (−) ΔWC | 548 | 13 | 17 | 18 | 4 | — |
| Free Cash Flow (FCF) | -9,470 | -8,298 | -7,862 | -7,555 | -5,969 | — |
| Peers' EBITDA Multiple | 21.7x | |||||
| Terminal Value | 154,903 | |||||
| WACC / Discount Rate | 8.17% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -9,105 | -7,376 | -6,461 | -5,740 | -4,192 | 104,596 |
| Enterprise Value | 71,723 | |||||
| Projection Period | -32,873 | -45.8% | ||||
| Terminal Value | 104,596 | 145.8% | ||||
| (−) Current Net Debt | 21,810 | |||||
| Equity Value | 49,913 | |||||
| (÷) Outstanding Shares | 273M | |||||
| Fair Price | $183 | -33.4% | ||||
| WACC \ EV/EBITDA Exit Multiple | 17.7x | 19.7x | 21.7x | 23.7x | 25.7x |
|---|---|---|---|---|---|
| 6.2% | $138 | $177 | $215 | $254 | $293 |
| 7.2% | $125 | $162 | $199 | $236 | $273 |
| 8.2% | $112 | $148 | $183 | $218 | $253 |
| 9.2% | $101 | $134 | $168 | $202 | $235 |
| 10.2% | $90 | $122 | $154 | $186 | $218 |
Current price: $274.73. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.