Is Royal Caribbean Group overvalued or undervalued?

As of 4 June 2025, the valuation grade for Royal Caribbean Group has moved from fair to expensive, indicating a shift in perception regarding its market value. The company is currently considered overvalued. Key ratios include a P/E ratio of 23, an EV to EBITDA of 17.08, and a PEG ratio of 0.55, which suggests that while the growth potential is favorable, the current price may not justify the earnings.
In comparison to peers, Royal Caribbean Group's P/E ratio of 22.06 is lower than Marriott International's 27.75 and significantly lower than Hilton Worldwide's 42.52, yet it still reflects a premium valuation. Furthermore, the company's strong return metrics, such as a ROE of 44.74% and a dividend yield of 75.85%, highlight its profitability but may not be enough to offset the high valuation. Notably, Royal Caribbean has outperformed the S&P 500 in various time frames, including a remarkable 81.10% return over the past year, which reinforces the narrative of its current overvaluation.