Global cruise vacation company, Royal Caribbean Cruises Ltd. RCL is scheduled to report fourth-quarter 2017 numbers on Jan 24, before the bell.

Last quarter, the company pulled off a positive earnings surprise of 1.75%. In fact, Royal Caribbean’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 3.15%.

The cruise operator’s shares have soared 51.8% in a year’s time, significantly outperforming the industry’s 24.2% gain.

Q3 Highlights

Royal Caribbean reported earnings of $3.49, which surpassed the Zacks Consensus Estimate. Earnings increased 9.1% from the year-ago quarter.

Total revenues were $2.57 billion, beating beat the consensus mark by a slight margin and increasing a meagre 0.2% year over year.

The company’s Double-Double program, which is aimed at doubling 2014 earnings per share by 2017 and lift return on invested capital (ROIC) to double-digit percentages, achieved its target for the 12 months ended Sep 30.

Q4 Expectations

Royal Caribbean’s top line is expected to be significantly driven by solid onboard revenues, strong performance of joint ventures and a decent book position.

Although Caribbean bookings have recovered quickly from hurricane impacts, they are expected to stay soft in the quarter. However, strong demand for North America, Europe and China products are likely to offset hurricane impacts to a considerable degree.

The Zacks Consensus Estimate for revenues is pegged at $1.98 million, reflecting a year-over-year increase of 3.4%.

In terms of bottom line, the consensus estimate for EPS stands at $1.20, reflecting a year-over-year decrease of 2.4%. The likely decline will probably be the result of rising costs. Royal Caribbean expects net cruise costs, excluding fuel, to be up roughly 8.5%. Planned investments and revenue generating activities will further add to costs.

Despite this, we expect the company to have achieved its Double-Double target. For 2017, the company now anticipates earnings in the band of $7.35 to $7.40 per share, compared with $7.35-$7.45 projected earlier. Notwithstanding the narrowed guidance, earnings in this range will ensure achievement of the Double-Double program.

Our Model Suggests a Beat

Please note that according to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Royal Caribbean has a Zacks Rank #3 and an Earnings ESP of +0.57%, a combination that suggests that the companyis likely to beat estimates.

Royal Caribbean Cruises Ltd. Price and EPS Surprise

Other Stocks to Consider

Here are some stocks that you may also want to consider as our model shows these have the right combination of elements to deliver a positive earnings surprise:

Penn National Gaming PENN, with an Earnings ESP of +3.64% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Marriott International MAR with an Earnings ESP of +0.32% and a Zacks Rank #1.

Las Vegas Sands Corp. LVS with an Earnings ESP of +3.45% and a Zacks Rank #2.

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Las Vegas Sands Corp. (LVS): Free Stock Analysis Report
 
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Royal Caribbean Cruises Ltd. (RCL): Free Stock Analysis Report
 
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