Royal Caribbean (NYSE:RCL) shares surged in the early trading session today. The cruise company delivered robust first-quarter results and hiked its financial outlook for the full year amid buoyant demand trends.
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Royal Caribbean Is Riding a Strong Wave
RCL’s Q1 revenue increased by 29% year-over-year to $3.7 billion, exceeding expectations by $10 million. Moreover, EPS of $1.77 outpaced estimates by a wide margin of $0.44.
Royal Caribbean continues to see robust momentum on the back of elevated demand, strength in onboard spending, and record bookings. During the quarter, its load factor stood at 107%, and gross cruise costs per APCD (available passenger cruise days) increased by 5.1%. Simultaneously, the company’s gross margin yields increased by 60.3%. The growth in RCL’s yields was largely driven by higher ticket pricing and favorable onboard revenue rates.
Additionally, RCL is experiencing a strong WAVE season, marked by strong demand and favorable pricing trends. The company noted that the market response to the Icon of the Seas, the largest cruise ship in the world, remains robust. The upcoming launches of the Utopia of the Sea and the Silver Ray this summer promise to be a further boost for RCL.
RCL’s Buoyant Outlook
Buoyed by this momentum, RCL expects that net yields for the upcoming quarter will improve by 10.2%-10.7%. For the full year, the company anticipates that net yields will increase by 9%-10%, compared to the prior estimates of a 5.25%-7.25% improvement. In addition to this, the EPS for the year is expected to range between $10.70 and $10.90, up from the previous outlook of $9.50 to $9.70.
What Is the Stock Price Forecast for RCL?
The continued post-pandemic recovery in leisure travel has propelled Royal Caribbean shares nearly 126% higher over the past year. Overall, the Street has a Strong Buy consensus rating on the stock, alongside an average RCL price target of $150.67. However, analysts’ views on the company could see a revision following today’s earnings report.
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