Key Insights
- Using the 2 Stage Free Cash Flow to Equity, Royal Caribbean Cruises fair value estimate is US$133
- With US$123 share price, Royal Caribbean Cruises appears to be trading close to its estimated fair value
- The US$129 analyst price target for RCL is 3.4% less than our estimate of fair value
Does the January share price for Royal Caribbean Cruises Ltd. (NYSE:RCL) reflect what it’s really worth? Today, we will estimate the stock’s intrinsic value by taking the expected future cash flows and discounting them to today’s value. We will use the Discounted Cash Flow (DCF) model on this occasion. It may sound complicated, but actually it is quite simple!
We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis…
