Royal Caribbean Cruises (NYSE:RCL) shareholders have earned a 55% return over the last year

Royal Caribbean Cruises Ltd. +0.74% Pre

Royal Caribbean Cruises Ltd.

RCL

124.26

124.26

+0.74%

0.00% Pre

It hasn't been the best quarter for Royal Caribbean Cruises Ltd. (NYSE:RCL) shareholders, since the share price has fallen 23% in that time. While that might be a setback, it doesn't negate the nice returns received over the last twelve months. After all, the share price is up a market-beating 55% in that time.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

Check out our latest analysis for Royal Caribbean Cruises

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the last year Royal Caribbean Cruises grew its earnings per share, moving from a loss to a profit.

The result looks like a strong improvement to us, so we're not surprised the market likes the growth. Generally speaking the profitability inflection point is a great time to research a company closely, lest you miss an opportunity to profit.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
NYSE:RCL Earnings Per Share Growth October 30th 2023

It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. This free interactive report on Royal Caribbean Cruises' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Royal Caribbean Cruises shareholders have received a total shareholder return of 55% over the last year. There's no doubt those recent returns are much better than the TSR loss of 3% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Royal Caribbean Cruises has 2 warning signs (and 1 which is significant) we think you should know about.

Royal Caribbean Cruises is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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