Investors who have owned stocks in the past year have generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE:SPY) total return over the past 12 months is 49.8%. But there is no question some big-name stocks performed better than others along the way.
Royal Caribbean’s Big Run: One company that has been a great investment in the past year has been cruise line giant Royal Caribbean Cruises Ltd (NYSE:RCL).
Royal Caribbean is the second-largest company in the cruise industry, and for most of the past decade it benefited from an aging baby boomer generation. The company operates a fleet of 60 ships, and its typical routes include 535 different destinations.
Unfortunately, after a solid decade of returns, Royal Caribbean experienced a near worst-case scenario to kick off the 2020s. The global COVID-19 outbreak shut down all of Royal Caribbean’s operations in March of last year, and the company recently extended its cancellations of all cruises through the end of May.
In 2019, Royal Caribbean generated earnings of $8.95 per share on $10.95 billion in revenue. In 2020, those numbers plummeted to a $27.05 EPS loss on just $2.20 billion in revenue.
At the beginning of 2020, Royal Caribbean shares were trading at around $135. By the beginning of March, the stock had dropped below $82 after news of the virus spreading in China prompted concerns about a U.S. pandemic. On March 12, Royal Caribbean shares plummeted from $44.37 to close at $30.27. A day later, the company announced it would be suspending all cruises for 30 days.
The stock broke below $20 for the first time on March 18 and ultimately bottomed at $19.25 in intraday trading.
Royal Caribbean In 2021, Beyond: Royal Caribbean shares initially bounced as high as $75.55 in June on optimism cruise ships would be back on the water sooner rather than later. Unfortunately, the initial rally fizzled and the stock dropped back down to $45.06 later that month.
In February 2021, Royal Caribbean shares hit a new post-crisis high of $99.24 pulling back to $89.82.
Royal Caribbean investors who bought one year ago and held on have generated a nice return on their investment. In fact, $1,000 in Royal Caribbean stock bought on March 16, 2020, would be worth about $2,797 today.
Looking ahead, analysts are expecting Royal Caribbean’s stock to run out of steam again in the next 12 months. The average price target among the 12 analysts covering the stock is $79, suggesting 11.8% downside from current levels.
(Photo: Royal Caribbean)