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Royal Caribbean (RCL) Up 10.5% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Royal Caribbean Cruises Ltd. (RCL - Free Report) . Shares have added about 10.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Royal Caribbean Beats on Q1 Earnings, Lifts ’17 View
Royal Caribbean posted mixed first-quarter 2017 results, wherein the bottom line outpaced the Zacks Consensus Estimate while the top line lagged the same.
Adjusted earnings of $0.99 per share were 7.6% ahead of the Zacks Consensus Estimate and 10% ahead of management’s guidance of $0.90, owing to strong close-in demand for the Caribbean. Further, earnings jumped a significant 73.7% from the year-ago tally of $0.57 due to higher revenues and a lower share count.
Total revenue increased 4.7% year over year to $2.01 billion, driven by higher passenger ticket revenues and better onboard spending. However, revenues missed the Zacks Consensus Estimate of $2.02 billion by 0.6%.
Quarter Highlights
On a constant currency basis, net yields increased 6% year over year, better than guidance.
Passenger ticket revenues were up roughly 2.9% to nearly $1.42 billion, while Onboard and other revenues increased 9.4% to $590.3 million.
Net cruise costs (NCC), excluding fuel, decreased 4.4% on a constant currency basis almost in line with management’s guidance of a decline of about 4.5%.
Also, total cruise operating expenses decreased 5.3% year over year to nearly $1.18 billion, mainly due to a decline in commissions, transportation and other costs, food, payroll and related as well as other operating costs. The decrease was partly offset by higher fuel, and onboard and other expenses.
2Q17 Guidance
For the second quarter, Royal Caribbean expects adjusted earnings per share in the range of $1.60 to $1.65.
Constant-currency net yields are projected to increase in the range of 10-10.5%. Robust demand for European and North American products, the deconsolidation of Pullmantur and new hardware being the key drivers of the expected yield improvement in the quarter.
NCC, excluding fuel, is likely to be down about 2% at constant currency. The absence of new ship launches and less dry dock expenses are driving reduced costs as compared with the prior year.
2017 Guidance Updated
The company now anticipates earnings in the band of $7 to $7.20 per share, up from the earlier guided range of $6.90–$7.10.
The company expects net yields to increase in the range of 4.5% to 6% (earlier 4-6%), on a constant currency basis, for the full year.
NCC, excluding fuel, on a constant currency basis, is expected to be flat to up slightly. Previously, the company expected the same to be flat.
Royal Caribbean stated that bookings have been strong since the start of the year and the trend is likely to continue.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter, while looking back an additional 30 days, we can see even more upward momentum. There have been seven moves up in the last two months. In the past month, the consensus estimate has shifted by 15.9% due to these changes.
At this time, Royal Caribbean's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Royal Caribbean (RCL) Up 10.5% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Royal Caribbean Cruises Ltd. (RCL - Free Report) . Shares have added about 10.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Royal Caribbean Beats on Q1 Earnings, Lifts ’17 View
Royal Caribbean posted mixed first-quarter 2017 results, wherein the bottom line outpaced the Zacks Consensus Estimate while the top line lagged the same.
Adjusted earnings of $0.99 per share were 7.6% ahead of the Zacks Consensus Estimate and 10% ahead of management’s guidance of $0.90, owing to strong close-in demand for the Caribbean. Further, earnings jumped a significant 73.7% from the year-ago tally of $0.57 due to higher revenues and a lower share count.
Total revenue increased 4.7% year over year to $2.01 billion, driven by higher passenger ticket revenues and better onboard spending. However, revenues missed the Zacks Consensus Estimate of $2.02 billion by 0.6%.
Quarter Highlights
On a constant currency basis, net yields increased 6% year over year, better than guidance.
Passenger ticket revenues were up roughly 2.9% to nearly $1.42 billion, while Onboard and other revenues increased 9.4% to $590.3 million.
Net cruise costs (NCC), excluding fuel, decreased 4.4% on a constant currency basis almost in line with management’s guidance of a decline of about 4.5%.
Also, total cruise operating expenses decreased 5.3% year over year to nearly $1.18 billion, mainly due to a decline in commissions, transportation and other costs, food, payroll and related as well as other operating costs. The decrease was partly offset by higher fuel, and onboard and other expenses.
2Q17 Guidance
For the second quarter, Royal Caribbean expects adjusted earnings per share in the range of $1.60 to $1.65.
Constant-currency net yields are projected to increase in the range of 10-10.5%. Robust demand for European and North American products, the deconsolidation of Pullmantur and new hardware being the key drivers of the expected yield improvement in the quarter.
NCC, excluding fuel, is likely to be down about 2% at constant currency. The absence of new ship launches and less dry dock expenses are driving reduced costs as compared with the prior year.
2017 Guidance Updated
The company now anticipates earnings in the band of $7 to $7.20 per share, up from the earlier guided range of $6.90–$7.10.
The company expects net yields to increase in the range of 4.5% to 6% (earlier 4-6%), on a constant currency basis, for the full year.
NCC, excluding fuel, on a constant currency basis, is expected to be flat to up slightly. Previously, the company expected the same to be flat.
Royal Caribbean stated that bookings have been strong since the start of the year and the trend is likely to continue.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter, while looking back an additional 30 days, we can see even more upward momentum. There have been seven moves up in the last two months. In the past month, the consensus estimate has shifted by 15.9% due to these changes.
Royal Caribbean Cruises Ltd. Price and Consensus
Royal Caribbean Cruises Ltd. Price and Consensus | Royal Caribbean Cruises Ltd. Quote
VGM Scores
At this time, Royal Caribbean's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.