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What's in the Cards for Royal Caribbean's (RCL) Q3 Earnings?

Zacks Equity Research
·3 min read

Royal Caribbean Group RCL is scheduled to report third-quarter 2020 results on Oct 29. In the last reported quarter, the company delivered a negative earnings surprise of 30.2%.

Trend in Estimate Revision

The Zacks Consensus Estimate for the company’s third-quarter bottom line is pegged at a loss of $4.92 per share. In the prior-year quarter, the company reported earnings per share of $4.27. The consensus mark for revenues is $55.7 million, suggesting a decline of 98.3% from the year-ago reported figure.

Royal Caribbean Cruises Ltd. Price and EPS Surprise

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

Royal Caribbean Cruises Ltd. price-eps-surprise | Royal Caribbean Cruises Ltd. Quote

Factors at Play

Royal Caribbean’s third-quarter results are likely to have been affected by the coronavirus pandemic. Moreover, dismal passenger ticket revenues on account of the company’s limited cruise operations as well as lower onboard and other revenues are likely to get reflected on the third-quarter top line.

The Zacks Consensus Estimate for passenger ticket revenues and onboard and other revenues is currently pegged at $27 million and $17 million, respectively, indicating a decline of 98.8% and 98% from the prior-year quarter.

Moreover, quarterly earnings are likely to have been negatively impacted by cash burn. The company estimates cash burn between $250 million to $290 million per month for the quarter. This includes ongoing ship operating expenses, administrative expenses, debt service, hedging costs and anticipated necessary CapEx.

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 +0.79%. 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 #4 (Sell).

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 in the quarter to be reported:

Camping World Holdings, Inc. CWH has a Zacks Rank #1 and an Earnings ESP of +22.91%.

Brunswick Corporation BC has an Earnings ESP of +1.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Activision Blizzard, Inc. ATVI has a Zacks Rank #2 and an Earnings ESP of +3.29%.

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Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report
 
Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
 
Camping World Holdings Inc. (CWH) : Free Stock Analysis Report
 
Brunswick Corporation (BC) : Free Stock Analysis Report
 
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Zacks Investment Research