Factors Setting the Tone for Royal Caribbean (RCL) Q4 Earnings
Royal Caribbean Group RCL is scheduled to release fourth-quarter 2021 results on Feb 4, 2022. In the previous quarter, the company reported a negative earnings surprise of 9.6%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the company’s fourth-quarter bottom line is pegged at a loss of $3.70 per share. In the prior-year quarter, the company reported a loss per share of $5.02.
For revenues, the consensus mark is pegged at $1,151 million. The projection suggests an increase of 3,272.3% from the year-ago quarter’s reported figure.
Royal Caribbean Cruises Ltd. Price and EPS Surprise
Royal Caribbean Cruises Ltd. price-eps-surprise | Royal Caribbean Cruises Ltd. Quote
Let’s take a look at how things have shaped up in the quarter.
Factors at Play
Royal Caribbean’s fourth-quarter performance is likely to have benefitted from pent-up demand and improved booking trends. During the previous quarter’s earnings call, the company reported an improvement in bookings on a sequential basis. The company stated that sailings for 2022 are booked within historical ranges and at higher prices from 2019 levels. The momentum is likely to have continued in the fourth quarter as well. Emphasis on technological innovations and product development initiatives, including revamped websites, new vacation packaging capabilities, support for mobile apps and increased bandwidth onboard, is likely to have driven the company’s performance in the fourth quarter.
The Zacks Consensus Estimate for passenger ticket revenues and onboard and other revenues is currently pegged at $769 million and $345 million, respectively, indicating growth of 4,296.8% and 1,972.1% from the prior-year quarter’s levels.
Increased focus on new ship additions and resumption of operations is likely to have driven the company’s fourth-quarter top line. Ever since the last business update, 11 more ships have returned to operation. It is already operating 40 ships across its five brands, representing 65% of its capacity. By 2021-end, it expects 50 out of 61 ships to resume services across its five brands, which represents nearly 100% of its core itineraries and nearly 80% of worldwide capacity. With an increased focus on lower loads per vessel, the company anticipates more than 1 million guests to sail by the end of 2021.
However, uncertainty revolving around pandemic-induced cancellations, interruptions and changing protocols might have dented the to-be-reported quarter’s performance. The company anticipates reporting a net loss on both GAAP and adjusted basis for the fourth quarter and fiscal 2021. It expects depreciation and amortization expenses in the range of $325 million to 330 million for fourth-quarter 2021. Net interest expenses for the fourth quarter are expected to be $250-$255 million. Meanwhile, capital expenditures for the remaining of 2021 are anticipated to be $600 million. Cash burn and supply chain issues might have negatively impacted the company’s performance in the fourth quarter.
What the Zacks Model Unveils
Our proven model does not predict an earnings beat for Royal Caribbean this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. 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: The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks Poised to Beat Earnings Estimates
Here are some stocks from the Zacks Consumer Discretionary space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat:
Oxford Industries, Inc. OXM has an Earnings ESP of +2.97% and a Zacks Rank #1.
Shares of Oxford Industries have gained 28% in the past year. OXM’s earnings topped the consensus mark thrice but missed the same on one occasion, the average surprise being 96.7%.
PlayAGS, Inc. AGS has an Earnings ESP of +42.71% and a Zacks Rank #2.
Shares of PlayAGS have gained 42.7% in the past year. AGS’ earnings topped the consensus mark thrice but missed the same on one occasion, the average surprise being 33.3%.
Boyd Gaming Corporation BYD has an Earnings ESP of +2.61% and a Zacks Rank #3.
Shares of Boyd Gaming have gained 28.9% in the past year. BYD’s earnings topped the consensus mark in all of the trailing four quarters, the average surprise being 56.4%.
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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
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