Royal Caribbean Cruises (RCL, Financial) reported strong third-quarter results, yet its stock saw a pre-market decline due to weaker-than-expected fourth-quarter profit guidance. The company announced an adjusted earnings per share of $5.20, surpassing analysts' consensus of $5.04, with revenue aligning with market expectations at $4.89 billion.
However, the cruise operator projected fourth-quarter earnings per share between $1.40 and $1.45, below the analyst forecast of $1.57. The company cited a $0.24 per share negative impact for the quarter, partly due to Hurricane Milton and other cost-related factors including rising stock compensation.
Looking ahead to 2024, Royal Caribbean revised its full-year adjusted earnings per share forecast to $11.57-$11.62, aligning with market expectations of $11.58. This marks the fourth upward revision this year, driven by frequent ticket price hikes and soaring demand for cruise travel post-pandemic.
The cruise industry, including operators like Norwegian Cruise Line (NCLH) and Carnival Cruise Line (CCL), witnesses a strong resurgence, with customers increasingly willing to spend on onboard experiences. The company's third-quarter booking trends were robust with a load factor reaching 111%, and net yield increased by 7.9% year-over-year, supported by price increases and strong onboard revenue.
Looking further ahead, Royal Caribbean anticipates continued strong booking trends into 2025, with projected earnings per share starting at $14. Despite these positive signals, investor concerns over the softer fourth-quarter guidance led to a pre-market stock drop of over 5% on Tuesday. Nonetheless, the stock has surged 57% year-to-date and 146% over the past 12 months, ranking fifth among S&P 500 components over the same period, and is the third-best performing stock in the index for 2023, following Nvidia (NVDA) and Meta (META).
