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Royal Caribbean (RCL) Q2 Earnings & Revenues Beat Estimates

Zacks Equity Research

Royal Caribbean Cruises Ltd. RCL reported impressive second-quarter 2019 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Notably, its top and bottom lines outpaced the consensus mark for the third straight quarter.

Adjusted earnings of $2.54 per share surpassed the Zacks Consensus Estimate of $2.45 and also increased 11.9% year over year, owing to higher revenues.

Total revenues were $2,806.6 million, outpacing the consensus mark of $2,794 million and increased 20.1% from the year-ago quarter number. This upside can be attributed to higher passenger ticket as well as onboard and other revenues.

Despite an earnings beat, shares of the company fell in the pre-market trading session. This is because management trimmed its earnings outlook for 2019. However, the company’s shares have gained 17.9% so far this year, outperforming the industry’s 6.8% rally.

 

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Quarterly Highlights

Passenger ticket revenues improved 20.6% to $2,017.8 million, and onboard and other revenues increased 18.6% to $788.8 million.

On a constant-currency basis, net yields rose 9.5% year over year. This improvement was driven by solid demand for core products as well as onboard experiential products and activities. However, travel restrictions to Cuba had a 30 basis point (bps) of negative impact.

Net cruise costs (NCC), excluding fuel per APCD, rose 8.9% on a constant-currency basis, lower than management’s expectation of 10% increase.

Total cruise operating expenses of $1,544.5 million improved 17.5% on a year-over-year basis. The company witnessed rise in operating expenses at the Payroll and related, Onboard and other, Commissions, transportation and other, and other operating segments. Fuel expenses also increased during the quarter under review.

Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise

 

Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise
Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise

Royal Caribbean Cruises Ltd. price-consensus-eps-surprise-chart | Royal Caribbean Cruises Ltd. Quote

3Q19 Guidance

For the third quarter of 2019, Royal Caribbean expects adjusted earnings per share to be $4.35. The Zacks Consensus Estimate for its third-quarter earnings is currently pegged at $4.33.

Constant-currency net yields are projected to increase 6.5%. NCC, excluding fuel, is likely to improve 11% on a constant-currency basis.

2019 View

Royal Caribbean projects earnings of $9.55-$9.65 per share for 2019 compared with $9.65-$9.85 mentioned earlier. The Zacks Consensus Estimate for current-year earnings stands at $9.65. The company expects net yields between 7.8% and 8.3% on a constant-currency basis, lower than the prior guidance of 7.5-9%.

NCC, excluding fuel, is expected to be up 10-10.5% on a constant-currency basis.

Zacks Rank & Stocks to Consider

Royal Caribbean currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same space are Lindblad Expeditions LIND, Live Nation LYV and SeaWorld SEAS. While Lindblad Expeditions currently sports a Zacks Rank #1 (Strong Buy), Live Nation and SeaWorld carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lindblad Expeditions, Live Nation and SeaWorld’s earnings for the current year are expected to increase 116.7%, 411.1% and 188.5%, respectively.

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Live Nation Entertainment, Inc. (LYV) : Free Stock Analysis Report
 
SeaWorld Entertainment, Inc. (SEAS) : Free Stock Analysis Report
 
Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
 
Lindblad Expeditions Holdings Inc. (LIND) : Free Stock Analysis Report
 
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