Royal Caribbean Cruises Ltd. RCL posted better-than-expected first-quarter 2018 results. Adjusted earnings of $1.09 per share surpassed the Zacks Consensus Estimate of 96 cents by 13.5% and increased 10.1% year over year backed by higher revenues. The bottom line also surpassed the company’s guidance of 95 cents.

Total revenues of $2,027.8 million marginally came below the consensus mark of $2,048.2 million but inched up 1% from the year-ago quarter. This upside can be attributed to higher passenger ticket as well as onboard and other revenues.

Following the quarterly results, the company’s shares increased 2.1% in pre-market trading session. In a year’s time, the stock has rallied 17.9%, outperforming the industry’s gain of 5.1%.

Quarterly Highlights

Passenger ticket revenues inched up 0.5% to $1,425.6 million, and onboard and other revenues increased 2% to $602.1 million.

On a constant-currency basis, net yields rose 4.9% year over year. This improvement was backed by strong demand for core products and better-than-expected onboard spend.

Net cruise costs (NCC), excluding fuel, grew 11.2% on a constant-currency basis, more than management’s expectation of a 10% increase. Notably, the rise in costs was mainly owing to timing.

Total cruise operating expenses came in at $1,176 million, almost flat year over year. The company witnessed rise in operating expenses at Payroll and related as well as other operating. However, operating expenses declined at Commissions, transportation and other, onboard and other food as well as fuel.

Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise

2Q18 Guidance

For the second quarter of 2018, Royal Caribbean expects adjusted earnings per share in the range of $1.85-$1.90. The Zacks Consensus Estimate for the quarter is currently pegged at $1.97.

Constant-currency net yields are projected in the band of 1.5-2.0% increase. NCC, excluding fuel, is likely to be up about 5% at constant currency.

2018 Outlook

For 2018, the company anticipates earnings in the band of $8.70-$8.90 per share, up from the prior estimate of $8.55-$8.75. The Zacks Consensus Estimate for the year is $8.72. The company expects net yields to lie between 2% and 3.75% on a constant-currency basis.

NCC, excluding fuel, is expected to be up 2.5% on a constant-currency basis. Meanwhile, management that the company has been experiencing strong booking trends for 2018.

Zacks Rank & Stocks to Consider

Royal Caribbean Cruises has a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in the same space include Bluegreen Vacations Corporation BXG, Cedar Fair, L.P. FUN and The Madison Square Garden Company MSG. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Bluegreen Vacations have gained 22% in the past three months.

Cedar Fair has delivered a positive earnings surprise in each of the trailing two quarters.

Madison Square Garden has reported better-than-expected earnings in the preceding two quarters.

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