Tumbling to a price of $104.34 during today's afternoon trading session, shares of D/B/A Royal Caribbean Cruises are now -9.66% below their average target price of $115.5. Does this mean the stock will reverse course? Analysts are giving RCL an average rating of buy and target prices ranging from 70.0 to 139.0 dollars per share.
For the greater market's outlook on the stock, we can use D/B/A Royal Caribbean Cruises's short interest as a proxy. The short interest represents the proportion of the float's shares that are tied to short positions, meaning that the investor believes the stock will decline in the future. Here, the stock's short interest is 12.0% which means the outlook is split.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of D/B/A Royal Caribbean Cruises, institutional investors own 74.2% of the shares, which indicates they have a very high stake in the company. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in RCL, it probably means they believe it is a solid investment choice.
But it could also mean they are buying up shares in an effort to acquire the company or to get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
Overall, there is mixed market sentiment towards D/B/A Royal Caribbean Cruises because of an analyst consensus of some upside potential, a buy rating, an above average percentage of its shares sold short, and an average number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about RCL:
It has trailing 12 month earnings per share (EPS) of $-4.0 per share
D/B/A Royal Caribbean Cruises has a trailing 12 month Price to Earnings (P/E) ratio of -26.1 while the S&P 500 average is 15.97
The company has a Price to Book (P/B) ratio of 9.28 in contrast to the S&P 500's average ratio of 2.95
D/B/A Royal Caribbean Cruises is a Consumer Discretionary company, and the sector average P/E and P/B ratios are 22.33 and 3.12 respectively