Royal Caribbean, a prominent cruise operator, had an outstanding performance in the S&P 500 last year. As investors eagerly await the release of the company’s fourth-quarter earnings report on Thursday, the question remains: Will Royal Caribbean continue its success or face challenges ahead?
Analysts’ Expectations and Previous Performance
Market analysts anticipate earnings per share of $1.14 on a revenue of $3.4 billion for this quarter. Comparatively, in the same quarter of the previous year, Royal Caribbean experienced a loss of $1.12 per share with a revenue of $2.6 billion. Notably, if the company surpasses these expectations, it will mark the seventh consecutive quarterly earnings beat for Royal Caribbean.
A Look at Last Year’s Triumph
In 2023, Royal Caribbean achieved an astonishing 162% surge in its shares, making it one of the top performers in the market. Only Nvidia and Meta Platforms managed to outshine Royal Caribbean’s success. The surging international travel demand played a significant role in driving substantial revenue during the first three quarters. Furthermore, this rising tide carried all cruise companies to remarkable heights, with Carnival stock experiencing a 130% increase and Norwegian Cruise Line Holdings witnessing a rise of 64%.
As Royal Caribbean prepares to present its earnings report, investors are eagerly focused not only on its impressive track record but also on the company’s future outlook. Will Royal Caribbean continue to ride smooth waves or face potential challenges that may disrupt its course? Only time will tell.
Analysis of Royal Caribbean’s Stock Performance
Investors are currently pondering the future of Royal Caribbean shares after witnessing an impressive surge. However, the cruise industry as a whole has experienced a decline this year, with Carnival stocks dropping by 11%, Norwegian stocks decreasing by 12%, and Royal Caribbean shares slightly decreasing by 2%. Despite this, Royal Caribbean shares have managed to recover from a 7% decrease on the first trading day of the year. According to Wall Street analysts, the average price target for Royal Caribbean shares is $131.18, indicating a potential 4% increase compared to the current price of $126. Furthermore, approximately 73% of analysts who cover the stock rate it as a Buy.
One reason for the industry’s slower recovery is the delayed rebound of international travel. As a consequence, analysts speculate that 2024 may be even more prosperous for Royal Caribbean in terms of revenue and profit compared to the previous year. The current consensus among experts is that the company will achieve full-year earnings of $9.21 per share on sales amounting to $15.8 billion. This projection translates to a remarkable 39% growth in earnings per share and a 14% increase in revenue compared to the estimates for 2023.
Sharon Zackfia, an analyst at William Blair, expressed positivity regarding the company’s prospects, stating that their pricing checks indicate ongoing strong demand and a promising outlook for 2024. Zackfia holds an Outperform rating for the stock.
In addition to the performance analysis, investors will also be monitoring Royal Caribbean’s response to the recent attacks in the Red Sea. Earlier this January, the company announced the cancellation of two voyages and stated that it is closely monitoring the situation.
Carnival Reroutes Ships Amidst Red Sea Concerns
Cruise giant Carnival has recently announced the rerouting of 12 ships that were initially scheduled to travel through the Red Sea. This strategic decision is expected to have a slight impact on the company’s full-year earnings, estimated to be around 7 to 8 cents per share. However, Carnival remains optimistic about the future, as they believe the negative repercussions will be counterbalanced by their strong booking momentum.
It is worth noting that the diversion of these ships serves as a proactive measure to address potential concerns and prioritize passenger safety. By redirecting the planned itineraries away from the Red Sea, Carnival aims to ensure a smooth and enjoyable experience for all guests on board.
Through this sensible approach, Carnival demonstrates their unwavering commitment to put passengers first. By staying abreast of the ever-changing global landscape, the company continues to adapt and prioritize the well-being of their customers.