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Royal Caribbean (RCL) Misses on Q3 Earnings, Trims '19 View

Zacks Equity Research

Royal Caribbean Cruises Ltd. RCL reported third-quarter 2019 results, wherein both earnings and revenues missed the respective Zacks Consensus Estimate after beating the same in preceding three quarters. Notably, Hurricane Dorian impacted the company’s performance in the quarter.

Adjusted earnings of $4.27 per share (include a 13 cents negative impact from Hurricane Dorian) lagged the Zacks Consensus Estimate of $4.31. However, the figure improved 7.3% year over year, owing to higher revenues.

Total revenues were $3,186.9 million, outpacing the consensus mark of $3,219 million and improved 14% from the year-ago quarter number. This upside can be attributed to higher passenger ticket, and onboard and other revenues.

Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise


Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise


Quarterly Highlights

Passenger ticket revenues improved 14.8% to $2,344.8 million, and onboard and other revenues increased 11.8% to $842.1 million.

On a constant-currency basis, net yields rose 6.4% year over year, which was marginally better than the company’s guidance considering the fact the Hurricane Dorian reduced both revenues and yields.

Net cruise costs (NCC), excluding fuel per APCD, rose 11% on a constant-currency basis. Decrease in capacity and relief efforts owing to the hurricane negatively impacted the metric by 150 basis points.

Total cruise operating expenses of $1,623 million improved 15% on a year-over-year basis. The company witnessed rise in operating expenses at the Payroll and related, Onboard and other, Commissions, transportation and other, and other operating segments. However, fuel expenses also improved during the quarter under review.

Q4 Guidance

For fourth-quarter 2019, Royal Caribbean expects adjusted earnings per share to be $1.40. The Zacks Consensus Estimate for fourth-quarter earnings is currently pegged at $1.44.

Constant-currency net yields are projected to increase 6.75%. NCC, excluding fuel, is likely to improve 14.5% on a constant-currency basis.

2019 View

Royal Caribbean projects earnings of $9.50-$9.55 per share for 2019 compared with $9.55-$9.65 mentioned earlier. The company’s earnings guidance includes negative impact of nearly 15 cents per share from itinerary disruptions and relief efforts owing to Hurricane Dorian. The Zacks Consensus Estimate for current-year earnings stands at $9.63. The company expects net yields to increase 8% on a constant-currency basis.

NCC, excluding fuel, is expected to be up 11% on a constant-currency basis, compared with prior guidance of 10-10.5%.

Zacks Rank & Stocks to Consider

Royal Caribbean, which shares space with Carnival Corporation & Plc CCL, has a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the Leisure space include Vail Resorts, Inc. MTN and Live Nation Entertainment, Inc. LYV. Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Vail Resorts has reported better-than-expected earnings in the trailing four quarters, the average being 4.5%.

Live Nation Entertainment current-year earnings are expected to witness robust growth of 388.9%.

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Click to get this free report Carnival Corporation (CCL) : Free Stock Analysis Report Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report Vail Resorts, Inc. (MTN) : Free Stock Analysis Report Live Nation Entertainment, Inc. (LYV) : Free Stock Analysis Report To read this article on Zacks.com click here.