As Royal Caribbean Cruises Ltd. (NYSE:RCL) released its earnings announcement on 31 December 2018, the consensus outlook from analysts appear somewhat bearish, as a 15% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 28%. Currently with trailing-twelve-month earnings of US$1.8b, we can expect this to reach US$2.1b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Royal Caribbean Cruises in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How will Royal Caribbean Cruises perform in the near future?
Over the next three years, it seems the consensus view of the 20 analysts covering RCL is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of RCL’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$1.8b and the final forecast of US$2.7b by 2022, the annual rate of growth for RCL’s earnings is 13%. This leads to an EPS of $12.37 in the final year of projections relative to the current EPS of $8.6. With a current profit margin of 19%, this movement will result in a margin of 21% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Royal Caribbean Cruises, I’ve put together three fundamental factors you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Royal Caribbean Cruises worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Royal Caribbean Cruises is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Royal Caribbean Cruises? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.