Royal Caribbean Jumps 18% on Record Bookings, Strong 2026 Guide
Cruise operator delivers best earnings day in years as WAVE season bookings hit seven consecutive weekly records. Guides EPS to $18.
Royal Caribbean just had its best trading day in years—and the company earned it.
Shares surged 18% Wednesday, gapping up from $291.60 to intraday highs near $347 after the cruise operator reported Q4 results that exceeded expectations and issued 2026 guidance that stunned analysts. The rally added roughly $10 billion in market cap.
The catalyst wasn't just the numbers. It was the booking momentum. Royal Caribbean has seen seven consecutive weekly booking records, with two-thirds of 2026 sailings already sold at record pricing levels.
The Numbers
Full-year 2025 adjusted EPS came in at $15.64, ahead of guidance. Net income hit $4.3 billion—a record. Revenue of $17.9 billion represented 8.8% growth year-over-year.
Q4 specifically delivered adjusted net income of $0.8 billion, or $2.80 per share, compared to $1.63 in the prior year period. That's a 72% increase.
For 2026, management guided adjusted EPS of $17.70 to $18.10. The midpoint of $17.90 sits well above the $16.50 consensus estimate. Wall Street expected strong guidance; they didn't expect this strong.
CEO Jason Liberty called 2025 "an outstanding year" and said momentum is "further accelerating into 2026."
WAVE Season Strength
The cruise industry's WAVE season—January through March, when most bookings occur for the year—started exceptionally strong.
Royal Caribbean reported the seven best booking weeks in company history, driven by Cyber Monday sales and robust early-year demand. Close-in bookings for Q1 sailings remain elevated, suggesting consumers are still willing to pay premium prices for cruise vacations.
Two-thirds of 2026 capacity is already booked at record per-diem rates. That visibility gives management unusual confidence in full-year guidance.
The demand picture contrasts sharply with broader consumer sentiment surveys, which show Americans increasingly worried about inflation and the economy. Cruise passengers—typically older, wealthier demographics—appear less affected by those concerns.
Capital Return and Balance Sheet
Royal Caribbean returned $2 billion to shareholders in 2025 through dividends and buybacks, a sign of how dramatically the balance sheet has healed since the pandemic.
Operating cash flow hit $6.5 billion for the year. That cash generation allows simultaneous fleet investment and shareholder returns—a luxury the company didn't have three years ago when it was fighting for survival.
The debt load remains elevated at roughly $20 billion, a hangover from pandemic-era borrowing. But with EBITDA expanding and interest rates stable, coverage ratios continue improving.
Fleet Expansion
Royal Caribbean delivered 9.4 million vacations in 2025 and expects that number to grow as new ships enter service.
Icon of the Seas—the world's largest cruise ship—completed its first full year of operation with strong utilization and premium pricing. The company has additional newbuilds scheduled for 2026 and beyond, funded by internal cash flow rather than new debt.
Fleet expansion in a supply-constrained industry typically supports pricing power. Unlike airlines, which can quickly add capacity through aircraft deliveries, cruise ships take years to build. That structural supply constraint benefits incumbents when demand is strong.
The Valuation Question
After Wednesday's surge, Royal Caribbean trades at roughly 12x forward earnings—cheap by historical standards but reflecting the industry's operational leverage and cyclical exposure.
Bears argue cruise stocks always look cheap before downturns. Consumer spending is cyclical, and any economic softness would hit discretionary travel first. The industry also faces regulatory and environmental headwinds that could increase costs.
Bulls counter that Royal Caribbean's booking momentum and pricing power suggest the consumer remains healthy, at least in the demographics that cruise. The WAVE season data provides real-time evidence that demand hasn't cracked.
For traders watching the consumer spending picture, Royal Caribbean's results offer a data point: upper-middle-class and wealthy Americans are still spending on experiences. Whether that extends to the broader economy is a different question.
Sector Read-Through
Royal Caribbean's strength may lift peers Carnival and Norwegian Cruise Line, though neither has reported yet.
The industry as a whole benefited from capacity discipline during the pandemic recovery and strong pent-up demand for travel. Whether 2026 sustains that momentum depends on the macro environment and consumer confidence.
For now, Royal Caribbean proved that at least one consumer-facing business is firing on all cylinders. An 18% single-day gain doesn't happen without genuine fundamental surprise.