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Royal Caribbean (RCL) Stock Up 40% in 3 Months: More Upside Left?
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Royal Caribbean Cruises Ltd. (RCL - Free Report) has been benefiting from digital initiatives, expanded onboard offerings and fleet expansion efforts. Also, the rise in close-in bookings and better-than-expected load factors have been driving sales improvement over the last few quarters.
Shares of Royal Caribbean have surged 40% in the past three months compared with the industry’s 24.4% growth. The price performance was backed by a solid earnings surprise history. Royal Caribbean’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Earnings estimates for full-year 2023 have moved up 3.5% in the past 60 days. This positive trend signifies bullish analysts’ sentiments and justifies the company’s Zacks Rank #2 (Buy). This indicates robust fundamentals and expectations of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Factors Driving Growth
Royal Caribbean continues using digital tools for marketing, product development and enhancing the consumer experience. The initiative plays a vital role in supporting the enhancement of customer preference, engagement, cruise frequency, guest experience and spending. The company has introduced new technological capabilities under its Project Excalibur. It has also rolled out a smartphone app to increase convenience and better serve guests. In addition to industry-wide trends, several unique factors are boosting the company’s numbers. Streaming WiFi, expanded onboard offerings, customized destination experiences and other ship upgrades are also paying off.
Image Source: Zacks Investment Research
During the third quarter of 2022, the company reported early consumer engagement, with about 60% purchasing onboard experiences before the sailings. This represents an 8-point increase in penetration and much higher revenue (related to pre-cruise purchases) from 2019 levels. The company focuses on new innovative ships and onboard experiences to boost its offering and deliver superior yields and margins.
On the supply front, the company is steadfast in increasing its capacity to meet rising demand. Moving into 2023, the company has three ships scheduled for delivery — Icon of the Seas, Celebrity Ascent and Silver Nova. The company stated that Icon will have eight distinct neighborhoods and that its stateroom configuration will allow for load factors to be accretive to the overall portfolio. Also, it reported a solid market response in terms of bookings for the ship. The company anticipates the ship to be significantly accretive to its key financial metrics.
Royal Caribbean has been benefiting from strong demand for cruising, relaxation in COVID-related protocols and acceleration in booking volumes. During the third quarter, booking volumes for 2022 sailings were up 50% from the 2019 levels. During the third quarter, the company reported accelerating demand for sailings in 2023. It stated that booking volumes for 2023 doubled during the third quarter compared with the second quarter of 2022.
The company noted better than expected load factors, owing to a rise in close-in bookings. It also stated that pricing (including and excluding FCCs) remains elevated from 2019 levels. As of Sep 30, 2022, the company had nearly $3.8 billion in customer deposits. During the quarter, the company witnessed a rise in new bookings and fewer FCC redemptions. Given the full fleet resumption and load factors (at approximately 95%), the company expects customer deposits to return to typical seasonality in the upcoming periods.
Other Key Picks
Some other top-ranked stocks in the Zacks Consumer Discretionary sector are World Wrestling Entertainment, Inc. , Manchester United plc (MANU - Free Report) and Hilton Grand Vacations Inc. (HGV - Free Report) .
World Wrestling Entertainment currently sports a Zacks Rank #1. WWE has a trailing four-quarter earnings surprise of 25.2%, on average. The stock has increased 70.9% in the past year.
The Zacks Consensus Estimate for WWE’s 2023 sales and earnings per share (EPS) indicates a rise of 4.9% and 10.7%, respectively, from the year-ago period’s estimated levels.
Manchester currently sports a Zacks Rank #1. MANU has a trailing four-quarter earnings surprise of 34.4%, on average. Shares of MANU have gained 60.7% in the past year.
The Zacks Consensus Estimate for MANU’s 2024 sales and EPS indicates a rise of 11.4% and 27.8%, respectively, from the year-ago levels.
Hilton Grand Vacations carries a Zacks Rank #2. HGV has a trailing four-quarter earnings surprise of 3.7%, on average. Shares of HGV have declined 14.6% in the past year.
The Zacks Consensus Estimate for HGV’s 2023 sales and EPS indicates a rise of 4.7% and 24.6%, respectively, from the year-ago period’s levels.
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Royal Caribbean (RCL) Stock Up 40% in 3 Months: More Upside Left?
Royal Caribbean Cruises Ltd. (RCL - Free Report) has been benefiting from digital initiatives, expanded onboard offerings and fleet expansion efforts. Also, the rise in close-in bookings and better-than-expected load factors have been driving sales improvement over the last few quarters.
Shares of Royal Caribbean have surged 40% in the past three months compared with the industry’s 24.4% growth. The price performance was backed by a solid earnings surprise history. Royal Caribbean’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Earnings estimates for full-year 2023 have moved up 3.5% in the past 60 days. This positive trend signifies bullish analysts’ sentiments and justifies the company’s Zacks Rank #2 (Buy). This indicates robust fundamentals and expectations of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Factors Driving Growth
Royal Caribbean continues using digital tools for marketing, product development and enhancing the consumer experience. The initiative plays a vital role in supporting the enhancement of customer preference, engagement, cruise frequency, guest experience and spending. The company has introduced new technological capabilities under its Project Excalibur. It has also rolled out a smartphone app to increase convenience and better serve guests. In addition to industry-wide trends, several unique factors are boosting the company’s numbers. Streaming WiFi, expanded onboard offerings, customized destination experiences and other ship upgrades are also paying off.
Image Source: Zacks Investment Research
During the third quarter of 2022, the company reported early consumer engagement, with about 60% purchasing onboard experiences before the sailings. This represents an 8-point increase in penetration and much higher revenue (related to pre-cruise purchases) from 2019 levels. The company focuses on new innovative ships and onboard experiences to boost its offering and deliver superior yields and margins.
On the supply front, the company is steadfast in increasing its capacity to meet rising demand. Moving into 2023, the company has three ships scheduled for delivery — Icon of the Seas, Celebrity Ascent and Silver Nova. The company stated that Icon will have eight distinct neighborhoods and that its stateroom configuration will allow for load factors to be accretive to the overall portfolio. Also, it reported a solid market response in terms of bookings for the ship. The company anticipates the ship to be significantly accretive to its key financial metrics.
Royal Caribbean has been benefiting from strong demand for cruising, relaxation in COVID-related protocols and acceleration in booking volumes. During the third quarter, booking volumes for 2022 sailings were up 50% from the 2019 levels. During the third quarter, the company reported accelerating demand for sailings in 2023. It stated that booking volumes for 2023 doubled during the third quarter compared with the second quarter of 2022.
The company noted better than expected load factors, owing to a rise in close-in bookings. It also stated that pricing (including and excluding FCCs) remains elevated from 2019 levels. As of Sep 30, 2022, the company had nearly $3.8 billion in customer deposits. During the quarter, the company witnessed a rise in new bookings and fewer FCC redemptions. Given the full fleet resumption and load factors (at approximately 95%), the company expects customer deposits to return to typical seasonality in the upcoming periods.
Other Key Picks
Some other top-ranked stocks in the Zacks Consumer Discretionary sector are World Wrestling Entertainment, Inc. , Manchester United plc (MANU - Free Report) and Hilton Grand Vacations Inc. (HGV - Free Report) .
World Wrestling Entertainment currently sports a Zacks Rank #1. WWE has a trailing four-quarter earnings surprise of 25.2%, on average. The stock has increased 70.9% in the past year.
The Zacks Consensus Estimate for WWE’s 2023 sales and earnings per share (EPS) indicates a rise of 4.9% and 10.7%, respectively, from the year-ago period’s estimated levels.
Manchester currently sports a Zacks Rank #1. MANU has a trailing four-quarter earnings surprise of 34.4%, on average. Shares of MANU have gained 60.7% in the past year.
The Zacks Consensus Estimate for MANU’s 2024 sales and EPS indicates a rise of 11.4% and 27.8%, respectively, from the year-ago levels.
Hilton Grand Vacations carries a Zacks Rank #2. HGV has a trailing four-quarter earnings surprise of 3.7%, on average. Shares of HGV have declined 14.6% in the past year.
The Zacks Consensus Estimate for HGV’s 2023 sales and EPS indicates a rise of 4.7% and 24.6%, respectively, from the year-ago period’s levels.