Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Statement of Comprehensive Income
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
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Profitability Ratios (Summary)
Royal Caribbean Cruises Ltd., profitability ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Gross profit margin
- The gross profit margin remained relatively stable and strong from 2017 to 2019, fluctuating slightly between 44.22% and 44.64%. However, there was a drastic reversal in 2020, with the margin turning negative to -25.19%, and this downward trend intensified in 2021, reaching -73.45%. This sharp decline indicates severe profitability challenges at the gross level during the latter two years.
- Operating profit margin
- The operating profit margin exhibited stability around 19% to 20% during the years 2017 through 2019. A drastic downturn occurred in 2020, with the margin plummeting to a large negative value of -208.33%, which further deteriorated to -252.61% in 2021. This indicates significant operational losses and substantial expense burdens relative to revenue during these years.
- Net profit margin
- Net profitability followed a similar pattern to operating margin, with moderate positive margins in the range of approximately 17% to 19% from 2017 to 2019. In 2020, the net profit margin turned sharply negative to -262.47%, and deteriorated further to -343.34% in 2021, showing escalating net losses over these two years.
- Return on equity (ROE)
- Return on equity was consistently positive and moderate from 2017 to 2019, ranging between 15.18% and 16.31%. This measure turned dramatically negative in 2020, dropping to -66.18%, and declined further to -103.44% in 2021. This suggests a significant erosion of shareholder value and substantial losses relative to equity.
- Return on assets (ROA)
- The return on assets showed a modest but steady decline from 7.29% in 2017 to 6.2% in 2019. In 2020, ROA turned negative at -17.86%, and remained negative in 2021 at -16.31%. This indicates that asset utilization became unprofitable during the last two years analyzed.
Return on Sales
Return on Investment
Gross Profit Margin
Royal Caribbean Cruises Ltd., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit (loss) | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Gross profit margin = 100 × Gross profit (loss) ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable trends in profitability and revenue over the five-year period ending December 31, 2021.
- Gross Profit (Loss)
- From 2017 to 2019, gross profit showed a consistent upward trend, increasing from approximately 3.88 billion USD to nearly 4.89 billion USD. However, in 2020, there was a sharp reversal, with gross profit turning into a significant loss of around 556 million USD, which deepened further in 2021 to a loss exceeding 1.12 billion USD.
- Revenues
- Revenue followed a positive trajectory from 2017 through 2019, rising steadily from about 8.78 billion USD to approximately 10.95 billion USD. However, in 2020, revenues plummeted dramatically to just over 2.2 billion USD and declined even further in 2021 to around 1.53 billion USD. This represents a severe disruption in the company's top-line performance during these years.
- Gross Profit Margin
- The gross profit margin remained relatively stable and robust during the first three years, hovering between 44.22% and 44.64%, indicating efficient cost management relative to revenues. The margin, however, turned negative in 2020, recording -25.19%, and further deteriorated to -73.45% in 2021. This indicates the company incurred substantial costs exceeding its revenues during these years, reflecting significant operational difficulties.
Overall, the data reflects a strong financial performance through 2019, followed by a sharp decline starting in 2020, likely impacted by extraordinary events. The negative gross profit margins alongside drastically reduced revenues in 2020 and 2021 suggest severe operational challenges, resulting in sustained losses despite efforts to generate income during this period.
Operating Profit Margin
Royal Caribbean Cruises Ltd., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income (loss) | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
| Operating Profit Margin, Sector | ||||||
| Consumer Services | ||||||
| Operating Profit Margin, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income (Loss)
- The operating income demonstrated a positive and increasing trend from 2017 through 2019, rising from approximately 1.74 billion USD to over 2.08 billion USD. However, in 2020, there was a substantial decline resulting in a significant operating loss of about 4.6 billion USD. This negative trend persisted in 2021 with another operating loss, though slightly reduced to approximately 3.87 billion USD.
- Revenues
- Revenues increased steadily from 2017 to 2019, moving from roughly 8.78 billion USD to 10.95 billion USD. In contrast, there was a dramatic drop in 2020 to about 2.21 billion USD, followed by a further decline in 2021 to approximately 1.53 billion USD, indicating a severe contraction in sales over these two years.
- Operating Profit Margin
- The operating profit margin was relatively stable and strong during the years 2017 to 2019, fluctuating narrowly around 19% to 20%. In 2020, the margin turned sharply negative to -208.33%, worsening to -252.61% in 2021. These figures highlight a drastic deterioration in profitability, well beyond the magnitude of the drop in revenues, reflecting severe operational challenges.
Net Profit Margin
Royal Caribbean Cruises Ltd., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) attributable to Royal Caribbean Cruises Ltd. | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
| Net Profit Margin, Sector | ||||||
| Consumer Services | ||||||
| Net Profit Margin, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net profit margin = 100 × Net income (loss) attributable to Royal Caribbean Cruises Ltd. ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss) Trend
- The net income attributable to the company experienced growth from 2017 to 2019, increasing from approximately 1.63 billion US dollars to nearly 1.88 billion US dollars. However, in 2020, the company reported a significant net loss of approximately 5.80 billion US dollars, which slightly improved but remained substantially negative in 2021 at about 5.26 billion US dollars. This indicates a sharp deterioration in profitability starting in 2020 and continuing into 2021.
- Revenue Trend
- Revenues followed a general upward trend between 2017 and 2019, rising from approximately 8.78 billion US dollars to around 10.95 billion US dollars. In 2020, revenue dropped dramatically to about 2.21 billion US dollars, reflecting a steep decline of nearly 80%. In 2021, revenues further decreased to approximately 1.53 billion US dollars, indicating continued challenges in generating sales during this period.
- Net Profit Margin Analysis
- The net profit margin was healthy and relatively stable from 2017 through 2019, with values ranging from 17.16% to 19.08%. However, in 2020 and 2021, margins turned deeply negative at -262.47% and -343.34%, respectively. This sharp reversal underscores the substantial losses relative to revenue and highlights extreme operational or market difficulties impacting profitability.
- Overall Insights
- The financial data illustrates a strong performance through 2019, with increasing revenues and net income accompanied by solid profit margins. Starting in 2020, the company encountered severe financial distress, evidenced by drastic drops in revenue and a transition from net profit to substantial net losses. The negative profit margins further confirm deteriorated profitability and operational challenges. The persistence of these adverse conditions into 2021 suggests that recovery or a return to prior financial performance was not yet realized within the period covered.
Return on Equity (ROE)
Royal Caribbean Cruises Ltd., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) attributable to Royal Caribbean Cruises Ltd. | ||||||
| Shareholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
| ROE, Sector | ||||||
| Consumer Services | ||||||
| ROE, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROE = 100 × Net income (loss) attributable to Royal Caribbean Cruises Ltd. ÷ Shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss) Attributable to Royal Caribbean Cruises Ltd.
- The net income demonstrated a positive and increasing trend from 2017 through 2019, rising from approximately 1.63 billion USD to nearly 1.88 billion USD. However, this trend sharply reversed in 2020, resulting in a substantial net loss of approximately 5.80 billion USD, which continued at a similar magnitude in 2021 with a loss of about 5.26 billion USD. This drastic decline reflects a significant negative impact on profitability during the years 2020 and 2021.
- Shareholders’ Equity
- Shareholders' equity exhibited growth from 2017 to 2019, increasing from about 10.70 billion USD to 12.16 billion USD. In 2020, equity decreased notably to approximately 8.76 billion USD, followed by a further decline in 2021 to roughly 5.09 billion USD. The reduction in equity over these two years highlights the financial strain experienced during this period, likely tied to operational and market challenges.
- Return on Equity (ROE)
- The ROE mirrored the net income trend, with values indicating strong performance in 2017 through 2019, maintaining rates above 15%. This performance deteriorated markedly in 2020, with ROE falling sharply to -66.18%, and further declining to -103.44% in 2021. These negative returns underscore significant losses relative to the shareholders' equity base, illustrating the severity of the downturn in profitability.
Return on Assets (ROA)
Royal Caribbean Cruises Ltd., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) attributable to Royal Caribbean Cruises Ltd. | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
| ROA, Sector | ||||||
| Consumer Services | ||||||
| ROA, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
ROA = 100 × Net income (loss) attributable to Royal Caribbean Cruises Ltd. ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Trends
- Net income attributable to the company showed a positive and increasing trend from 2017 to 2019, rising from approximately 1.63 billion US dollars in 2017 to nearly 1.88 billion US dollars in 2019. However, a significant reversal occurred in 2020 where the company reported a substantial loss of around 5.8 billion US dollars, followed by a slightly lower but still considerable loss of about 5.3 billion US dollars in 2021.
- Total Assets
- The company's total assets increased steadily from 22.3 billion US dollars in 2017 to a peak of approximately 32.5 billion US dollars in 2020. In 2021, total assets slightly declined but remained fairly stable at around 32.3 billion US dollars, indicating an overall growth in asset base despite the challenging years.
- Return on Assets (ROA)
- Return on assets reflected profitability trends, starting at 7.29% in 2017 with a gradual decrease to 6.2% in 2019. The ROA then turned sharply negative in 2020 and 2021, recording -17.86% and -16.31% respectively, which aligns with the net income losses, showing the company experienced substantial declines in asset profitability during this period.
- Summary of Financial Health
- The data indicate that the company experienced strong performance and asset growth through 2019. However, beginning in 2020, both profitability and returns on assets deteriorated sharply, corresponding with large net losses despite a continued growth and stabilization in total assets. This pattern suggests significant operational or market challenges impacting earnings while the asset base remained elevated.