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Factors Setting the Tone for Royal Caribbean (RCL) Q2 Earnings

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Royal Caribbean Group (RCL - Free Report) is scheduled to release second-quarter 2022 results on Jul 28, 2022. In the previous quarter, RCL delivered an earnings surprise of 2.4%.

Trend in Estimate Revision

The Zacks Consensus Estimate for Royal Caribbean’s second-quarter bottom line is pegged at a loss of $2.23 per share. In the prior-year quarter, RCL reported a loss per share of $5.06.

For revenues, the consensus mark is pegged at $2,163 million. The projection suggests an increase of 4,148.2% from the year-ago quarter’s reported figure.

Let’s take a look at how things have shaped up for the quarter to be reported.

Factors at Play

Royal Caribbean’s second-quarter performance is likely to have benefited from strong demand for leisure travel and cruising, improved booking trends and solid onboard spending. During the previous quarter’s earnings call, RCL reported an improvement in bookings for its North American-based itineraries. Per management, bookings for the regions (particularly in February and March) exceeded the 2019 levels. Also, it reported better load factors, backed by an expanded volume of close-in bookings. Given that the majority of its destinations and markets (outside China) resumed operations, the momentum is likely to have continued in the second quarter. Increased penetration of pre-cruise purchases is likely to have driven RCL’s onboard revenue performance in the to-be reported quarter.

The Zacks Consensus Estimate for second-quarter passenger ticket revenues, and onboard and other revenues is currently pegged at $1,450 million and $721 million each, indicating growth from the respective prior-year quarter’s reported figures of $22.8 million and $28.1 million.

However, rise in cancellations and booking hesitancy for the Baltic Sea itineraries and geopolitical tensions are likely to have weighed on Royal Caribbean’s load factor (concerning European sail). Besides, supply-chain constraints, elevated expenses (including fuel and food), uncertainty revolving around pandemic-induced cancellations and changing protocols might have affected RCL’s performance in the second quarter. Management anticipates a net loss on both GAAP and adjusted basis for the second quarter of 2022.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Royal Caribbean this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat on earnings. But that's not the case here.

Earnings ESP: Royal Caribbean has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Royal Caribbean presently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat on Earnings

Here are some stocks worth considering from the Zacks Consumer Discretionary sector, as our model shows that these have the right combination of elements to beat on earnings this season.

Marriott International, Inc. (MAR - Free Report) has an Earnings ESP of +7.11% and a Zacks Rank #2.

Shares of Marriott have increased 7.3% in the past year. MAR’s earnings surpassed the consensus mark in each of the trailing four quarters, the average being 36.2%.

Callaway Golf Company has an Earnings ESP of +2.69% and a Zacks Rank of 2.

Shares of Callaway Golf have declined 32.8% in the past year. ELY’s earnings surpassed the consensus mark in all the trailing four quarters, the average being 955.5%.

Crocs, Inc. (CROX - Free Report) has an Earnings ESP of +0.30% and a Zacks Rank of 3.

Shares of Crocs have declined 53.8% in the past year. CROX’s earnings surpassed the consensus mark in all the trailing four quarters, the average being 26.5%.

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