Introduction and History
Royal Caribbean Cruises is a cruise company in the travel and transportation industry that quickly grew into a billion dollar company. In 1968, Royal Caribbean was incorporated in Liberia. As the second largest cruise company, it has been able to continue afloat despite many litigation issues earning a grand total of $8.7 billion in 2017. The company has 49 ships operating that set sail towards an estimated 540 breathtaking destinations worldwide (“Annual Report”, 2017, p.1). While Royal Caribbean is large, it is still behind Carnival Corporation. Its other competitors include Norwegian Cruise Line, Star Cruises Ltd, and Disney Cruise Lines.
Royal Caribbean owns and operates multiple cruise brands. All of which,
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The parameters for the problem using a 10-year bond are beta (0.99 or 1.00), the risk-free rate (2.97%), and the risk premium (5.7%). R (RCL)= 0.0297+0.99(0.057)=0.08613= 8.613%. The result found demonstrates that Royal Caribbean’s expected return is fruitful. The company continues to grow over the years especially since it is in the travel industry. The travel industry is constantly progressing and obtaining profits as individuals need to move from point A to point B or simply need a vacation. This return corresponds with the alpha that is positive signaling higher expected return given its …show more content…
The stock and risk assessments of the company demonstrate the potential to earn returns on investments with Royal Caribbean. Despite the company’s scandals and income fluctuations, Royal Caribbean offers customer value that in turn has ensured stakeholder returns over the years, especially with the dividend payout policy. Therefore, we recommended purchasing stock with the company with the current undervaluation. This project has allowed us to familiarize ourselves with data, financial terms, and gain an understanding of how to properly assess a