Royal Caribbean Reports Earnings Soon. What to Expect.

That accolade goes to Royal Caribbean’s 2024 earnings outlook. It expects adjusted earnings per share to grow about 40% to between $9.50 and $9.70. That beat analysts’ expectations for earnings per share of $9.21, according to FactSet, and would set a new company record.

Royal Caribbean reported adjusted earnings of $1.25 per share in the fourth quarter on revenue of $3.3 billion as strong close-in, or short notice, demand helped it end a stellar year on a high.

The stock, which was 1.5% down this year as of Wednesday’s close, jumped 4.3% ahead of the open Thursday.

Royal Caribbean
was one of the best-performing stocks in the
S&P 500
last year. Given its strong run, the cruise operator’s fourth-quarter earnings report, could have signaled choppy seas ahead but the strong results suggest more smooth sailing for now.

The shares soared 162% in 2023, behind only
Nvidia
and
Meta Platforms,
as booming international travel demand led to bumper revenue in the first three quarters. Those rising tides lifted all boats, so to speak, as shares of other cruise companies enjoyed stellar years.
Carnival
stock climbed 130%, while
Norwegian Cruise Line Holdings
rose 64%.

After such a run, investors are questioning whether Royal Caribbean shares can go any higher. There was plenty in the company’s earnings report to suggest they can.

Demand remains very strong—the company said that the five best weeks for booking in its history have all occurred since its last earnings call at the end of October. “As a result the company is now in a record booked position in both rate and volume,” it said.

Royal Caribbean’s new ‘Icon of the Seas’—the world’s largest cruise ship—set sail on its maiden voyage from Miami on Saturday. The cruise operator said the market response to its new ships, and particularly the ‘Icon of the Seas’ has been excellent and “further positions the company for strong yield and earnings growth in 2024.”

Cruise stocks have fallen so far this year: Carnival and Norwegian both by 11%, and Royal Caribbean by 1.5%—as of Wednesday’s close. Royal Caribbean shares have recovered since falling 7% on the first trading day of the year. Wall Street’s average price target of $131.18 on Royal Caribbean shares implies a roughly 4% upside from a recent $126, while 73% of analysts covering shares rate them Buy.

The cruise industry’s recovery has lagged behind that of the rest of the travel industry, largely because international travel was slower to rebound. As a result, 2024 looks set to be even better than last year for Royal Caribbean’s revenue and profit.

The stock is unlikely to match the gains of 2023 but its earnings certainly chart the course for the shares to move higher.

Write to Callum Keown at [email protected]