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Royal Caribbean (RCL) Up 6.2% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Royal Caribbean (RCL - Free Report) . Shares have added about 6.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Royal Caribbean due for a pullback? 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 drivers.

Royal Caribbean Q2 Earnings & Revenues Miss Estimates

Royal Caribbean reported second-quarter 2021 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. The top line declined year over year.

The company continues to focus on resumption of services. It is already operating 29 ships across its five brands, representing 42% of capacity. By the end of August, Royal Caribbean anticipates to operate 36 ships, which represent more than 60% of its capacity. It expects to operate at 80% of its capacity by the end of 2021.

Q2 Earnings & Revenues

The company reported adjusted loss per share of $5.06, wider than the Zacks Consensus Estimate of a loss of $4.26. In the prior-year quarter, it had reported adjusted loss per share of $6.13 per share.

Quarterly revenues of $50.9 million lagged the consensus mark of $163 million. The top line plunged 70% year over year. The company’s results have been negatively impacted by coronavirus pandemic.

The average monthly cash burn for the second quarter was roughly $330 million.

Quarterly Highlights

During second-quarter 2021, passenger ticket revenues fell 78.7% year over year to $22.8 million, while onboard and other revenues declined to $28.1 million from $68.6 million reported in the prior-year quarter.

Total cruise operating expenses were $424.8 million compared with $680.4 million at the end of second-quarter 2020.

Other Financial Information

As of Jun 30, 2021, the company had cash and cash equivalents of approximately $4,250.4 million compared with $3,684.5 million as on Dec 31, 2020. As of Jun 30, the company’s long-term debt was nearly $20.1 billion compared with $18 billion as of Dec 31, 2020.

The company announced that as of Jun 30, 2021, the anticipated debt maturities for the remainder of 2021 and 2022 were $21 million and $2.2 billion, respectively.

2021 Guidance & Booking Update

The company has withdrawn guidance as it is unable to estimate the financial losses due to the coronavirus pandemic.

The company anticipates to report net loss on both GAAP and adjusted basis for the third quarter and the fiscal 2021.

The company expects depreciation and amortization expenses in the range of $320 million to 325 million for third-quarter 2021. Net interest expenses for the third quarter are expected to be $265-$270 million. Meanwhile, capital expenditures for the remaining of 2021 are anticipated to be $900 million.

The pandemic has significantly impacted bookings for 2021. However, booking volumes have improved. During second-quarter 2021, the company received nearly 50% more bookings in comparison to the first-quarter 2021. The trend continues to improve every month.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -54.17% due to these changes.

VGM Scores

Currently, Royal Caribbean has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Royal Caribbean has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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