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Royal Caribbean (RCL) Stock Sinks As Market Gains: Here's Why

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Royal Caribbean (RCL - Free Report) ended the recent trading session at $259.27, demonstrating a -2.45% change from the preceding day's closing price. The stock fell short of the S&P 500, which registered a gain of 0.11% for the day. Meanwhile, the Dow experienced a drop of 0.07%, and the technology-dominated Nasdaq saw an increase of 0.22%.

The cruise operator's stock has climbed by 3.56% in the past month, exceeding the Consumer Discretionary sector's gain of 0.05% and the S&P 500's gain of 0.08%.

The investment community will be closely monitoring the performance of Royal Caribbean in its forthcoming earnings report. It is anticipated that the company will report an EPS of $2.8, marking a 71.78% rise compared to the same quarter of the previous year. Simultaneously, our latest consensus estimate expects the revenue to be $4.27 billion, showing a 13.43% escalation compared to the year-ago quarter.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $15.64 per share and revenue of $17.94 billion. These totals would mark changes of +32.54% and +8.85%, respectively, from last year.

Any recent changes to analyst estimates for Royal Caribbean should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, there's been a 0.01% fall in the Zacks Consensus EPS estimate. Royal Caribbean is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note Royal Caribbean's current valuation metrics, including its Forward P/E ratio of 17. For comparison, its industry has an average Forward P/E of 17.45, which means Royal Caribbean is trading at a discount to the group.

We can also see that RCL currently has a PEG ratio of 0.8. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The Leisure and Recreation Services industry currently had an average PEG ratio of 1.21 as of yesterday's close.

The Leisure and Recreation Services industry is part of the Consumer Discretionary sector. At present, this industry carries a Zacks Industry Rank of 87, placing it within the top 36% of over 250 industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.


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