It has been about a month since the last earnings report for Royal Caribbean (RCL Quick QuoteRCL - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Royal Caribbean due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Royal Caribbean Q4 Earnings Beat Estimates, Fall Y/Y

Royal Caribbean reported fourth-quarter 2020 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. However, the metrics declined sharply on a year-over-year basis.

Following the announcement, Jason T. Liberty, executive vice president and CFO of Royal Caribbean stated, "These results reflect the staggering impact that the pandemic brought to our Company and the whole industry during 2020.”

Nonetheless, the company resumed operations in limited capacity and started receiving positive reviews by customers sailing through the same. Going forward, the initiative is likely to boost the company’s image in terms of sailing demonstrations under the COVID-19 environment. Furthermore, it expects to re-start its global cruise operation in a phased manner with initial cruises having reduced guest occupancy, modified itineraries as well as enhanced health and safety protocols.

Q4 Earnings & Revenues

The company reported adjusted loss per share of $5.02, narrower than the Zacks Consensus Estimate of a loss of $5.04. In the prior-year quarter, it had reported adjusted earnings per share of $1.42 per share.

Quarterly revenues of $34.1 million missed the consensus mark of $52 million by 34.4%. In the prior year quarter, the company had reported revenues of $2,517.4 million. Due to the pandemic, the company suspended its global cruise operation beginning Mar 13, 2020, which resulted in the cancellation of fourth-quarter sailings. The cancellations have also been extended for some ships till Apr 30, 2021.

During suspension of operations, the company anticipates cash burn in the range of $250-$290 million per month.

Quarterly Highlights

During fourth-quarter 2020, passenger ticket revenues plunged 99% year over year to $17.5 million, while onboard and other revenues declined to $16.6 million from $733 million from prior-year quarter’s levels.

Total cruise operating expenses were $265.3 million compared with $1,481.5 million at the end of fourth-quarter 2019.

Other Financial Information

As of Dec 31, 2020, the company had cash and cash equivalents of approximately $3.7 billion. As of Dec 31, 2020, the company’s long-term debt was nearly $18 billion compared with $8.4 billion at the end of Dec 31, 2019. The company announced that as of Feb 22, 2021, the anticipated debt maturities for 2021 are $0.4 billion.

Fleet Updates

Owing to the suspension of operations in 2020, the company divested three ships, namely —  Celebrity Xperience, Majesty of the Seas and Empress of the Seas. It also entered into a definite agreement to sell its Azamara brand which includes Azamara Journey, Azamara Quest and Azamara Pursuit. Moreover, it divested three ships being used by its Pullmantur affiliate.

In 2021, the company expects to take delivery of Odyssey of the Seas and Silver Dawn during the first and fourth quarter, respectively. Moving into 2022, the company has two ships scheduled for delivery namely —  Wonder of the Seas and Celebrity Beyond.

2021 Guidance

Due to the pandemic, the company has withdrawn guidance. The company is unable to estimate the financial losses owing to the coronavirus as the magnitude and duration of the same is uncertain. The company anticipates to report net loss on both GAAP and adjusted basis for the first quarter and the fiscal 2021.

The company expects depreciation and amortization expenses to be approximately $310 million, for the first quarter 2021. Meanwhile, capital expenditures for 2021 are anticipated to be $2.1 billion.

The pandemic has significantly impacted bookings for 2021. However, cumulative advance booking for sailings in the first half of 2022 are within historical ranges. During the quarter, the company witnessed 75% of new bookings for 2021. However, the remaining 25% reflect redemption of Future Cruise Credits and the "Lift & Shift" program.

2020 Highlights

Total revenues in 2020 came in at $2,208.8 million compared with $10,950.7 million in 2019. Total cruise operating expenses in 2020 came in at $2,765.1 million compared with $6,062.8 million in 2019. In 2020, adjusted loss per share came in at $18.31 against earnings of $9.54 in the previous year.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

Currently, Royal Caribbean has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Royal Caribbean has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.