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Royal Caribbean (RCL) to Post Q3 Earnings: What's in Store?

·3 min read
In this article:
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  • RCL

Royal Caribbean Group RCL is scheduled to report third-quarter 2021 results on Oct 29, before the opening bell. In the last reported quarter, the company delivered a negative earnings surprise of 18.8%.

Q3 Estimates

The Zacks Consensus Estimate for third-quarter bottom line is pegged at a loss of $4.10 per share. In the prior-year quarter, the company had reported a loss per share of $5.62. The consensus mark for revenues stands at $713.4 million, suggesting growth of 2,217.6% from the year-ago reported figure.

Factors to Note

Royal Caribbean’s third-quarter performance is likely to have benefited from resumption of cruise services and booking improvement. In June, the company resumed sailing from the United States with its state-of-the-art, luxury ship — Celebrity Edge. This was the first cruise to sail from an U.S. port after suspension of services for more than a year due to the pandemic.

The pandemic has significantly impacted bookings for 2021. However, booking volumes are likely to have improved in the third quarter. During the second -quarter of 2021, the company received nearly 50% more bookings compared to the first quarter of 2021.

However, the coronavirus pandemic continues to hurt the company’s performance. Cancellations of cruises due to the ongoing crisis and change in booking patterns might have weighed on the to-be-reported quarter’s performance. It anticipates reporting net loss on both GAAP and adjusted basis for the third quarter and fiscal 2021. The company expects depreciation and amortization expenses in the range of $320 million to 325 million for third-quarter 2021. Net interest expenses for the third quarter are expected to be $265-$270 million. Meanwhile, capital expenditures for the remaining of 2021 are anticipated to be $900 million.

The Zacks Consensus Estimate for passenger ticket revenues is currently pegged at $360 million, compared with $3.2 million reported in the prior-year quarter. The consensus mark for onboard and other revenues is pegged at $168 million. Cash burn may have hurt the to-be-reported quarter’s performance.

Royal Caribbean Cruises Ltd. Price and EPS Surprise
Royal Caribbean Cruises Ltd. Price and EPS Surprise

What the Zacks Model Unveils

Our proven model does not conclusively 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 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 #5 (Strong Sell).

Stocks With Favorable Combinations

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 deliver an earnings beat this time around.

Golden Entertainment, Inc. GDEN has a Zacks Rank #1 and an Earnings ESP of +51.95%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Choice Hotels International, Inc. CHH has a Zacks Rank #2 and an Earnings ESP of +4.04%.

Accel Entertainment, Inc. ACEL has a Zacks Rank #2 and an Earnings ESP of +20.00%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report

Choice Hotels International, Inc. (CHH) : Free Stock Analysis Report

Golden Entertainment, Inc. (GDEN) : Free Stock Analysis Report

Accel Entertainment, Inc. (ACEL) : Free Stock Analysis Report

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Zacks Investment Research