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Royal Caribbean (RCL) Q3 Earnings Top, Sales Lag Estimates

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Royal Caribbean Cruises Ltd. (RCL - Free Report) reported mixed results for the third quarter of 2018, wherein earnings surpassed analysts’ expectations while revenues lagged the same.

Adjusted earnings of $3.98 per share surpassed the Zacks Consensus Estimate of $3.96 by 0.5% and increased 13.5% year over year backed by higher revenues. The bottom-line figure was also higher than $3.90-$3.95 anticipated by the company.

Total revenues of $2,796.2 million lagged the consensus mark of $2,822 million but increased 8.8% from the year-ago quarter number. This upside can be attributed to higher passenger ticket as well as onboard and other revenues.

Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise

 

Quarterly Highlights

Passenger ticket revenues jumped 7.9% to $2,042.9 million, and onboard and other revenues increased 11.4% to $753.3 million.

On a constant-currency basis, net yields rose 2.6% year over year. This improvement was backed by strong demand for core products and better-than-expected onboard spend.

Net cruise costs (NCC), excluding fuel, was down 0.1% on a constant-currency basis, slightly lower than management’s expectation of 1% increase.

Total cruise operating expenses were $1,411.4 million, up 7.1% on a year-over-year basis. The company witnessed rise in operating expenses at Payroll and related, Onboard and other, Commissions, transportation and other, and other operating segments. Further, fuel and food expenses were up during the quarter under review.

4Q18 Guidance

For the fourth quarter of 2018, Royal Caribbean expects adjusted earnings per share of $1.45-$1.50. The Zacks Consensus Estimate for the quarter is currently pegged at $1.58.

Constant-currency net yields are projected to increase by 6.5-7%. NCC, excluding fuel, is likely to be up6-6.5% on a constant-currency basis.

2018 Outlook

For 2018, Royal Caribbean is anticipating earnings of $8.75-$8.85 per share compared with $8.70-$8.90 mentioned earlier. The Zacks Consensus Estimate for the year stands at $8.91per share. The company expects net yields to lie between 4% and 4.5% on a constant-currency basis.

NCC, excluding fuel, is expected to be up 4.5% on a constant-currency basis.

Zacks Rank & Peer Release

Royal Caribbean currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank(Strong Buy) stocks here.

Carnival Corporation (CCL - Free Report) reported better-than-expected results for third-quarter fiscal 2018. Earnings were $2.36 per share, which outpaced the Zacks Consensus Estimate of $2.31 and improved 3.1% year over year.

Key Picks

Two top-ranked stocks from the industry are SeaWorld Entertainment and Marcus Corporation (MCS - Free Report) , each sporting a Zacks Rank #1.

Current-year earnings of SeaWorld and Marcus are expected to grow 128.6% and 18.2%, respectively.

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