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Should Value Investors Buy Royal Caribbean Cruises (RCL) Stock?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Royal Caribbean Cruises (RCL - Free Report) . RCL is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 12.44, which compares to its industry's average of 15.28. RCL's Forward P/E has been as high as 19.64 and as low as 10.16, with a median of 12.73, all within the past year.

RCL is also sporting a PEG ratio of 0.41. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RCL's industry currently sports an average PEG of 0.49. Within the past year, RCL's PEG has been as high as 0.49 and as low as 0.36, with a median of 0.44.

Finally, we should also recognize that RCL has a P/CF ratio of 10.84. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 11.75. Within the past 12 months, RCL's P/CF has been as high as 18.54 and as low as 9.08, with a median of 10.90.

Value investors will likely look at more than just these metrics, but the above data helps show that Royal Caribbean Cruises is likely undervalued currently. And when considering the strength of its earnings outlook, RCL sticks out at as one of the market's strongest value stocks.


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