Royal Caribbean's Explorer of the Seas may have gotten a few hundred passengers sick but is its stock healthy?
It's one thing to be seasick. It's another thing to get sick while stuck at sea.
Nearly 600 Royal Caribbean passengers aboard the Explorer of the Seas found themselves suffering from vomiting and diarrhea, and that was even before returning to port two days earlier than expected in Bayonne, NJ. Vacationers were struck with gastroenteritis caused by the norovirus, virus that quickly spreads in contaminated food.
But, while Royal Caribbean's passengers may be having trouble keeping their food down, traders are hurling the stock up 4% in one day thanks to Monday's quarterly report release. While the company's $1.85 billion in fourth quarter revenues were in line with expectations, earnings per share were $0.23, five cents above estimates. Royal Caribbean also said it expects earnings for 2014 to come in between $3.20 to $3.40 per share compared analyst estimates of $3.17.
Should investors expect smooth sailing on Royal Caribbean in the months ahead or should it be flushed now that it's up 27% for the last 12 months?
"This happens on every cruise line," says Gina Sanchez, founder of Chantico Global, on CNBC's Street Signs' Talking Numbers segment. "Quite frankly, the cruise ship sector has been an amazing play."
While Sanchez finds their fundamentals to be in shape, she believes the stock is too expensive. It currently trades at 15.3 times its forward earnings and 146 times its trailing twelve months earnings.
Carter Worth, Chief Technical Strategist at Oppenheimer & Co., says the charts are ready to set sail.
"The charts look quite good," says Worth. "It's outperforming the market and keeping up with peers such as the hospitality group, hotels, lodging, [and] gaming."
Worth notes that the stock is now testing its previous highs near the $50 level reached back in 2011.
"The presumption is, after responding to the $50 level, the stock will exceed the $50 level," says Worth. "We're buyers here. We think it's got $57 - $58 written all over it."
To see the rest of the discussion on Royal Caribbean by Sanchez on the fundamentals and Worth on the technicals, watch the video above.
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