Royal Caribbean smashes expectations, sees plain sailing ahead
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Royal Caribbean smashes expectations, sees plain sailing ahead

Royal Caribbean Cruises, the world’s second-largest cruise line, reported strong earnings last week that prompted its CEO, Richard Fain, to claim that “the business is amazingly strong.” He’s not wrong: Royal Caribbean beat the Street on the top- and bottom-lines, and it looks very well-positioned in an industry that, as a whole, is experiencing a massive up-tick in demand. Unsurprisingly, investors sent the company’s share price higher on the back of this great news.

Plain sailing: Royal Caribbean’s share price increases by 32% year to date

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Source: Yahoo Finance

On Wednesday, Royal Caribbean announced that it had earned $1.31 per share, easily beating out the Street’s expectations for earnings of $1.11 per share. It also beat on revenue, reporting a figure of $2.44 billion, as opposed to consensus estimates of $2.38 billion. The company is also providing positive guidance above estimates, saying it expects full-year earnings of more-than $10 per share. However, an “about” 50c headwind from currency fluctuations, higher fuel costs, and a one-time loss (an accident at a shipyard that damaged one of its ships) mean the final figure will come in between $9.65 and $9.85.

Fain was explicit about how well the company had done in its first quarter, telling analysts: “We had given a very bullish outlook at the beginning of the year, and to come back and say that our business doing so much better than those aggressive projections I think has made everyone feel good.” He also said that he sees consumption remaining strong, with consumers “showing tremendous strength and confidence.” He added: “Every indicator of what they’re buying shows a confidence level that we haven’t seen for a long time. The consumer, from what we’re seeing, is in a very good place.”

Disclosure

Dominion holds Royal Caribbean Cruises in its Global Trends Luxury Fund.


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