Royal Caribbean Cruises has agreed to buy a 50% stake in Sandals and Beaches Resorts for about US$3b, forming a joint venture in Caribbean all inclusive vacations. The deal was announced while Royal Caribbean Cruises shares traded at US$238.98, up 3.77% over one day but down 18.24% over 30 days and down 15.63% year to date. Longer term returns remain strong, with the 3 year total shareholder return up 162.62% and the 5 year total shareholder return up 177.91%. The most widely followed narrative values Royal Caribbean Cruises at a fair value of $346.92, roughly 31% above the last close of $238.98, a gap that rests on earnings power compounding as pricing and guest spend hold up. That narrative could change if consumer spending weakens and trims bookings, or if higher fuel and operating costs reduce profitability.
Royal Caribbean Cruises LtdRoyal Caribbean agreed to buy a 50% stake in Sandals and Beaches Resorts for about US$3b, forming a joint venture in Caribbean all-inclusive vacations.
