We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
What's Behind Royal Caribbean's (RCL) 163% Surge in a Year?
Read MoreHide Full Article
Over the past year, Royal Caribbean Cruises Ltd. (RCL - Free Report) has demonstrated remarkable performance, with its stock showing a significant jump of 162.6%. The industry increased 14.7% during the same period. Strong booking trends for both North American and European sailings continue to aid the company.
Last month, RCL reported second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines rose on a year-over-year basis.
For 2023, management expects depreciation and amortization expenses to be between $1,465 million and $1,475 million, down from the prior guided range of $1,470-$1,490 million. Net interest expenses (excluding loss on extinguishment of debt) are suggested in the $1,272-1,282 million band, which decreased from the earlier projection of $1,290-1,300 million.
Adjusted EBITDA is estimated to surpass 2019 reported levels. Adjusted EPS is anticipated to be between $6 and $6.20, up from the previous prediction of $4.40-$4.80.
Further, analysts are very optimistic about the company’s solid prospects. In the past 30 days, earnings estimate for 2023 has witnessed a 27.3% upward revision to $6.02 per share.
Let’s delve deeper.
Growth Drivers
The Zacks Rank #1 (Strong Buy) company's booking volume has maintained a growing pace in second-quarter 2023, with notable momentum seen in 2023 and 2024 sailings. A major portion of the current bookings are directed toward sailings for the upcoming year. During the second quarter of 2023, RCL witnessed a robust North American consumer market and heightened bookings from Europe for summer vacations.
As of Jun 30, 2023, North America-based sailings portrayed healthy booking trends, accounting for nearly 76% of the company’s capacity. Management noted better-than-expected load factors (at approximately 105%), owing to a rise in close-in bookings. It also stated that pricing (including and excluding FCCs) remained elevated from 2019 levels.
Image Source: Zacks Investment Research
RCL focuses on new innovative ships and onboard experiences to differentiate its offering as well as deliver superior yields and margins. In the first half of 2023, it unveiled three new ships that align with its strategy and are poised to generate higher yields from 2024 onward. In July 2023, Silversea introduced Silver Nova, the first of the new Evolution class.
In the upcoming months, RCL's Celebrity Cruises is planning to introduce Celebrity Ascent. Meanwhile, Royal Caribbean plans to introduce innovative Icon on the Seas in the fourth quarter of 2023. As of Jun 30, 2023, it had 46 new ships on order that are to be delivered through 2028.
Royal Caribbean continues to make use of digital tools for marketing, product development and enhancing consumer experience. These include revamped websites, new vacation packaging capabilities, support for mobile apps and increased bandwidth onboard to help its guests remain well-connected while at sea. With busier customers preferring more digital devices that help to save time, the introduction of superior Internet bandwidth and online check-in accompanied by radio-frequency identification technology should continue to increase occupancy.
The Zacks Consensus Estimate for LYV’s 2023 sales and EPS implies improvements of 21% and 57.8%, respectively, from the year-ago period’s levels.
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 147.9%, on average. The stock has increased 41.6% in the past year.
The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS suggests surges of 104.9% and 537.9%, respectively, from the year-ago period’s levels.
OneSpaWorld Holdings Limited (OSW - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 42.6%, on average. The stock has climbed 24.3% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates rises of 44.5% and 107.1%, respectively, from the year-ago period’s levels.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
What's Behind Royal Caribbean's (RCL) 163% Surge in a Year?
Over the past year, Royal Caribbean Cruises Ltd. (RCL - Free Report) has demonstrated remarkable performance, with its stock showing a significant jump of 162.6%. The industry increased 14.7% during the same period. Strong booking trends for both North American and European sailings continue to aid the company.
Last month, RCL reported second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines rose on a year-over-year basis.
For 2023, management expects depreciation and amortization expenses to be between $1,465 million and $1,475 million, down from the prior guided range of $1,470-$1,490 million. Net interest expenses (excluding loss on extinguishment of debt) are suggested in the $1,272-1,282 million band, which decreased from the earlier projection of $1,290-1,300 million.
Adjusted EBITDA is estimated to surpass 2019 reported levels. Adjusted EPS is anticipated to be between $6 and $6.20, up from the previous prediction of $4.40-$4.80.
Further, analysts are very optimistic about the company’s solid prospects. In the past 30 days, earnings estimate for 2023 has witnessed a 27.3% upward revision to $6.02 per share.
Let’s delve deeper.
Growth Drivers
The Zacks Rank #1 (Strong Buy) company's booking volume has maintained a growing pace in second-quarter 2023, with notable momentum seen in 2023 and 2024 sailings. A major portion of the current bookings are directed toward sailings for the upcoming year. During the second quarter of 2023, RCL witnessed a robust North American consumer market and heightened bookings from Europe for summer vacations.
As of Jun 30, 2023, North America-based sailings portrayed healthy booking trends, accounting for nearly 76% of the company’s capacity. Management noted better-than-expected load factors (at approximately 105%), owing to a rise in close-in bookings. It also stated that pricing (including and excluding FCCs) remained elevated from 2019 levels.
Image Source: Zacks Investment Research
RCL focuses on new innovative ships and onboard experiences to differentiate its offering as well as deliver superior yields and margins. In the first half of 2023, it unveiled three new ships that align with its strategy and are poised to generate higher yields from 2024 onward. In July 2023, Silversea introduced Silver Nova, the first of the new Evolution class.
In the upcoming months, RCL's Celebrity Cruises is planning to introduce Celebrity Ascent. Meanwhile, Royal Caribbean plans to introduce innovative Icon on the Seas in the fourth quarter of 2023. As of Jun 30, 2023, it had 46 new ships on order that are to be delivered through 2028.
Royal Caribbean continues to make use of digital tools for marketing, product development and enhancing consumer experience. These include revamped websites, new vacation packaging capabilities, support for mobile apps and increased bandwidth onboard to help its guests remain well-connected while at sea. With busier customers preferring more digital devices that help to save time, the introduction of superior Internet bandwidth and online check-in accompanied by radio-frequency identification technology should continue to increase occupancy.
Other Key Picks
Some other top-ranked stocks from the Zacks Consumer Discretionary sector are:
Live Nation Entertainment, Inc. (LYV - Free Report) sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 34.6%, on average. The stock has gained 11.9% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LYV’s 2023 sales and EPS implies improvements of 21% and 57.8%, respectively, from the year-ago period’s levels.
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 147.9%, on average. The stock has increased 41.6% in the past year.
The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS suggests surges of 104.9% and 537.9%, respectively, from the year-ago period’s levels.
OneSpaWorld Holdings Limited (OSW - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 42.6%, on average. The stock has climbed 24.3% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates rises of 44.5% and 107.1%, respectively, from the year-ago period’s levels.