Royal Caribbean Cruises Ltd. RCL continues to use fuel hedging as part of its broader efforts to manage operating expenses. The company expects fuel expenses of approximately $1.34 billion in 2026. As of second-quarter 2026, 58% of remaining 2026 fuel consumption was hedged at significantly below-market rates. This coverage provides partial protection against fuel-price increases while supporting greater visibility into its cost outlook.
Fuel costs nevertheless remain a source of pressure. Second-quarter fuel expense increased to $355 million from $279 million a year earlier due to higher rates per metric ton. The company stated that a 10% change in fuel prices could affect expenses by approximately $26 million over the remainder of 2026, highlighting the exposure that remains despite hedging.
For 2026, Royal Caribbean expects net cruise costs per available passenger cruise day, excluding fuel, to remain approximately flat on a constant-currency basis, supported by ongoing efficiency improvements and prudent cost management. Including fuel, unit cruise costs are expected to increase approximately 1.4% on the same basis, underscoring the additional pressure from fuel expenses.
The company added fuel hedges for 2027 when prices eased in June. As of June 30, hedge coverage represented 49% of projected fuel purchases for 2027, 29% for 2028 and 14% for 2029, extending protection beyond the current year.
Overall, Royal Caribbean’s below-market fuel hedges provide a partial cushion for its approximately $1.34 billion fuel expense outlook. Together with operating efficiencies and disciplined spending, this coverage could help preserve profitability.
How Cruise Peers Are Managing Fuel Costs
Carnival Corporation Ltd. CCL prioritizes lower fuel consumption over hedging to manage energy costs. In the third quarter of fiscal 2026, fuel consumption declined nearly 4% year over year, building on a reduction of more than 5% a year earlier. Carnival expects the full-year fuel expense of approximately $2.25 billion, including emission allowances, with consumption of approximately 2.7 million metric tons. Fuel consumption per available lower berth day has declined 26% since 2019, helping cushion higher prices. However, a 10% change in fuel cost per metric ton, excluding emission allowances, could affect CCL’s fiscal fourth-quarter adjusted net income by approximately $59 million, highlighting continued exposure to price volatility.
Norwegian Cruise Line Holdings Ltd. NCLH also uses fuel hedging to limit exposure to energy-price volatility. As of June 30, 2026, NCLH had hedged approximately 52% of projected 2026 fuel consumption and 38% for 2027. Fuel costs nevertheless remained under pressure, with second-quarter expense reaching $219 million as prices per metric ton, net of hedges, increased to $888 from $659 a year earlier. Norwegian Cruise expects a full-year fuel price of $780 per metric ton, net of hedges. A 10% change in fuel prices, net of hedges, would affect full-year adjusted earnings per share (EPS) by approximately 5 cents, indicating continued exposure to price volatility.
RCL’s Price Performance, Valuation & Estimates
Shares of Royal Caribbean have declined 17.5% in the past year compared with the industry’s 11.2% fall.
RCL Stock’s One-Year Price Performance
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From a valuation standpoint, RCL trades at a forward price-to-earnings ratio of 13.37, below the industry’s average of 15.48.
RCL’s P/E Ratio (Forward 12-Month) vs. Industry
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The Zacks Consensus Estimate for RCL’s 2026 earnings implies a year-over-year increase of 13.8%. The EPS estimates for 2026 have remained unchanged in the past 30 days.
EPS Trend of RCL Stock
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RCL’s Zacks Rank
RCL stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Royal Caribbean Cruises Ltd. (RCL): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).