With its full fleet back in operation, Royal Caribbean (RCL -0.14%) has enjoyed a record-breaking booking season, driven by historically strong demand. In fact, the seven best booking weeks ever for Royal Caribbean occurred since its third-quarter earnings call last November.

While the cruise operator sets booking records, its stock trades nearly 47% below its January 2020 high. Let's take a look at Royal Caribbean's Q4 and full-year 2022 results and determine if this cruise line stock is due for some upside recovery.

Business is accelerating

During the Q4 earnings call earlier this month, CEO Jason Liberty boasted that at Royal Caribbean, "business has returned to normal," and that "business is accelerating."

Indeed, although fourth-quarter performance did not yield any profit, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) finished above company guidance at $409 million.  

Q4's net loss of $500 million marked substantial improvement over 2021's $1.4 billion loss during the same period, and also beat company expectations. From a revenue standpoint, last quarter's $2.6 billion marked a 265% improvement year over year.

Continued heightened demand for vacation experiences, better close-in bookings, and onboard revenue generation helped boost better-than-expected results in the fourth quarter. And December load factor, or the percentage of guests aboard vessels, finished at 95% -- with peak holiday sailings reaching 110%. 

As CFO Naftali Holtz explained, "Better cost management and favorable timing of expenses across several categories, lower fuel rates, lower customer acquisition cost, and lower interest expense also contributed to the financial results." 

For the year, Royal Caribbean earned more than six times as much revenue as in 2021. Although the Miami-based carrier ended the year with a $2.1 billion net loss, it marks a substantial improvement over 2021's $5.3 billion loss.

Costs still surge

Fourth-quarter net cruise costs, excluding fuel, rose 3.9% compared with the same period in 2019, and included a 100-basis-point "transitory" impact related to health protocols as well as fleet and crew movement costs.

As Holtz explained during the Q4 earnings call, "We expect these transitory costs to substantially dissipate as the majority of our crew has returned and protocols have eased." Royal Caribbean aims to reshape its cost structure through "operational and distribution efficiencies and leveraging group scale," according to Holtz.

Having impacted operations throughout 2022, inflation and supply chain fragility continue to pressure margins for Royal Caribbean -- raising costs in categories such as food and beverage, airfare, and labor. 

And since costs are seasonally higher in the first half of the year due to increased dry dock days during the latter portion of the prior year, Holtz and his team will push to grow capacities and yields while keeping costs under control.

A record-breaking wave season

Bookings surpassed 2019 levels significantly throughout the fourth quarter, with exceptionally successful Black Friday and Cyber Monday sales. As for post-holiday bookings, Liberty said, "We expected a strong wave season, but what we are currently experiencing has exceeded all expectations even when considering our capacity growth."

With persistent demand across all segments that surpasses 2019 levels, Royal Caribbean pushes ahead full sail. For 2023, the company expects to see 14% higher capacity than 2019 and earnings per share of $3.00-$3.60. 

Based on the current record-breaking wave season, combined with the fact that guests are booking more onboard activities while on cruises, things are certainly looking up for Royal Caribbean. Although net cruise costs (excluding fuel) are anticipated to rise roughly 5.25% for the year compared to 2019, the cruise line plans to counter them with increased revenue.

Is Royal Caribbean stock a buy in today's market?

As consumer preferences change from goods to experiences, Royal Caribbean's market continues to grow. Because of historically strong travel demand and the cruise line's record-breaking booking season, I personally think it's only a matter of time before the company's all-time high booking records are reflected in the stock price. For that reason, I consider Royal Caribbean stock a buy at its current price level.