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Factors That Emphasize Royal Caribbean's (RCL) Solid Prospects
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Royal Caribbean Cruises Ltd. (RCL - Free Report) is gaining from robust booking trends, addition of new ships and focus on Trifecta Program. The stock has surged 163.3% in the past year compared with the industry’s gain of 25%.
Our model predicts the Zacks Rank #1 (Strong Buy) company’s 2023 earnings and sales to increase 158.8% and 46% year over year, respectively. In the past 60 days, earnings estimates for 2023 have witnessed upward revisions of 45.2% to $4.69 per share.
Let’s check out the factors that make RCL an attractive pick.
Robust Booking Trends
The company is gaining from improved bookings. As of Mar 31, 2023, North America-based sailings portrayed robust booking trends, accounting for nearly 76% of RCL’s capacity. Management noted better-than-expected load factors owing to a rise in close-in bookings.
It also stated that pricing (including and excluding FCCs) remains elevated from 2019 levels. It reported a rise in pre-cruise onboard purchases (at higher prices) on a year-over-year basis.
As of Mar 31, 2023, RCL had $5.3 billion in customer deposits. Given the full fleet resumption and load factors at high prices (at approximately 102%), it expects customer deposits to return to typical seasonality in the upcoming periods. In 2023, Royal Caribbean anticipates solid guest generation from the North America region. Per our model, 2023 onboard and other revenues are likely to rise 52.3% year over year.
Image Source: Zacks Investment Research
Addition of New Ships
RCL is also focusing on addition of new ships to drive growth. As of Mar 31, 2023, it had 46 new ships on order that are to be delivered through 2028. Management stated that Icon will have eight distinct neighborhoods and that its stateroom configuration will allow for load factors to be accretive to the overall portfolio.
Also, it reported a solid market response in terms of bookings. RCL anticipates the ships to be significantly accretive to its key financial metrics.
Focus on Trifecta Program
During third-quarter 2022, the company unveiled a three-year financial performance initiative, Trifecta Program, thereby articulating longer-term financial objectives. The program emphasizes financial coordinates including adjusted EBITDA per APCD, adjusted EPS and ROIC with an intent to achieve it by 2025 end. Under this program, Royal Caribbean expects to achieve triple-digit adjusted EBITDA per APCD, exceeding the earlier record of $87 in 2019.
Management also expects to achieve double-digit adjusted earnings per share, exceeding the earlier record of $9.54 in 2019. It anticipates achieving a return on invested capital in the teens by the end of 2025. The company intends to achieve the metrics on account of its underlying strategies, robust secular and demographic trends, moderate capacity growth, moderate yield growth and strong cost discipline.
Other Key Picks
Some other top-ranked stocks from the Zacks Consumer Discretionary sector include Bluegreen Vacations Holding Corporation , Skechers U.S.A., Inc. (SKX - Free Report) and Crocs, Inc. (CROX - Free Report) .
The Zacks Consensus Estimate for BVH’s 2023 sales and earnings per share (EPS) indicates rises of 3.6% and 17.6%, respectively, from the year-ago period’s levels.
Skechers currently flaunts a Zacks Rank #1. SKX delivered a trailing four-quarter earnings surprise of 18.8%, on average. The stock has increased 20.3% in the year-to-date period.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates improvements of 7.7% and 31.9%, respectively, from the year-ago period’s levels.
Crocs carries a Zacks Rank #2 (Buy) at present. CROX has a trailing four-quarter earnings surprise of 19.6%, on average. The stock has declined 2.3% in the year-to-date period.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates gains of 13.1% and 5.6%, respectively, from the year-ago period’s levels.
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Factors That Emphasize Royal Caribbean's (RCL) Solid Prospects
Royal Caribbean Cruises Ltd. (RCL - Free Report) is gaining from robust booking trends, addition of new ships and focus on Trifecta Program. The stock has surged 163.3% in the past year compared with the industry’s gain of 25%.
Our model predicts the Zacks Rank #1 (Strong Buy) company’s 2023 earnings and sales to increase 158.8% and 46% year over year, respectively. In the past 60 days, earnings estimates for 2023 have witnessed upward revisions of 45.2% to $4.69 per share.
Let’s check out the factors that make RCL an attractive pick.
Robust Booking Trends
The company is gaining from improved bookings. As of Mar 31, 2023, North America-based sailings portrayed robust booking trends, accounting for nearly 76% of RCL’s capacity. Management noted better-than-expected load factors owing to a rise in close-in bookings.
It also stated that pricing (including and excluding FCCs) remains elevated from 2019 levels. It reported a rise in pre-cruise onboard purchases (at higher prices) on a year-over-year basis.
As of Mar 31, 2023, RCL had $5.3 billion in customer deposits. Given the full fleet resumption and load factors at high prices (at approximately 102%), it expects customer deposits to return to typical seasonality in the upcoming periods. In 2023, Royal Caribbean anticipates solid guest generation from the North America region. Per our model, 2023 onboard and other revenues are likely to rise 52.3% year over year.
Image Source: Zacks Investment Research
Addition of New Ships
RCL is also focusing on addition of new ships to drive growth. As of Mar 31, 2023, it had 46 new ships on order that are to be delivered through 2028. Management stated that Icon will have eight distinct neighborhoods and that its stateroom configuration will allow for load factors to be accretive to the overall portfolio.
Also, it reported a solid market response in terms of bookings. RCL anticipates the ships to be significantly accretive to its key financial metrics.
Focus on Trifecta Program
During third-quarter 2022, the company unveiled a three-year financial performance initiative, Trifecta Program, thereby articulating longer-term financial objectives. The program emphasizes financial coordinates including adjusted EBITDA per APCD, adjusted EPS and ROIC with an intent to achieve it by 2025 end. Under this program, Royal Caribbean expects to achieve triple-digit adjusted EBITDA per APCD, exceeding the earlier record of $87 in 2019.
Management also expects to achieve double-digit adjusted earnings per share, exceeding the earlier record of $9.54 in 2019. It anticipates achieving a return on invested capital in the teens by the end of 2025. The company intends to achieve the metrics on account of its underlying strategies, robust secular and demographic trends, moderate capacity growth, moderate yield growth and strong cost discipline.
Other Key Picks
Some other top-ranked stocks from the Zacks Consumer Discretionary sector include Bluegreen Vacations Holding Corporation , Skechers U.S.A., Inc. (SKX - Free Report) and Crocs, Inc. (CROX - Free Report) .
Bluegreen Vacations presently sports a Zacks Rank #1. BVH has a trailing four-quarter earnings surprise of 24.7%, on average. The stock has gained 37.4% in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for BVH’s 2023 sales and earnings per share (EPS) indicates rises of 3.6% and 17.6%, respectively, from the year-ago period’s levels.
Skechers currently flaunts a Zacks Rank #1. SKX delivered a trailing four-quarter earnings surprise of 18.8%, on average. The stock has increased 20.3% in the year-to-date period.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates improvements of 7.7% and 31.9%, respectively, from the year-ago period’s levels.
Crocs carries a Zacks Rank #2 (Buy) at present. CROX has a trailing four-quarter earnings surprise of 19.6%, on average. The stock has declined 2.3% in the year-to-date period.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates gains of 13.1% and 5.6%, respectively, from the year-ago period’s levels.