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Royal Caribbean Cruises Ltd. (RCL), headquartered in Miami, Florida, operates as a global cruise vacation company. Valued at $41.5 billion by market cap, it serves global cruise brands: Royal Caribbean International, Celebrity Cruises, Azamara, and Silversea Cruises. The firm also holds interest in TUI Cruises, Pullmantur and SkySea Cruises brands.
Shares of this cruise operator have outperformed the broader market considerably over the past year. RCL has gained 62.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 28.3%. In 2024 alone, RCL stock is up 24.7%, surpassing SPX’s 17.6% rise on a YTD basis.
Zooming in further, RCL’s outperformance looks more pronounced compared to ALPS Global Travel Beneficiaries ETF (JRNY). The exchange-traded fund has gained about 2.2% over the past year. Moreover, RCL’s double-digit gains on a YTD basis outshine the ETF’s 3.5% losses over the same time frame.
RCL’s robust price performance can be attributed to higher pricing on close-in demand, onboard revenue, and achieving Trifecta goals ahead of schedule. The company has reinstated its dividend by capturing a larger share of the global vacation market through disciplined expansion and cost control and is in a record-booked position for 2024 sailings. Consumer spending onboard and pre-cruise purchases continue to exceed 2023 levels, leading to stronger revenue and improved earnings expectations for the year.
However, on Jul. 25, RCL shares fell more than 7% after reporting its Q2 results, despite becoming the first cruise operator to reinstate dividends following the pandemic. Its adjusted EPS of $3.21 exceeded Wall Street expectations of $2.77. The company’s revenue was $4.1 billion, topping Wall Street forecasts of $4 billion. The company increased its full-year adjusted EPS and expects it to be between $11.35 and $11.45, reflecting a 68% year-over-year growth.
For the current fiscal year, ending in December, analysts expect RCL’s EPS to grow 71.8% to $11.63 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 17 analysts covering RCL stock, the consensus is a “Strong Buy.” That’s based on 13 “Strong Buy” ratings, one “Moderate Buy,” and three “Holds.”
On Jul. 29, Morgan Stanley analyst Jamie Rollo maintained a “Hold” rating on RCL with a price target of $140.
The mean price target of $186.22 represents a 15.4% premium to RCL’s current price levels. The Street-high price target of $210 suggests an upside potential of 30.1%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
