Royal Caribbean Group is expected to top its own profit guidance, and potentially beat Wall Street estimates, in an earnings report scheduled for Thursday as the cruise sector continues a growth trend.
The average estimate for 16 analysts polled by Yahoo Finance calls for the Miami cruise ship giant, the world’s second-largest player in the sector and the parent of Royal Caribbean International, Celebrity Cruises and Silversea Cruises, to report $2.75 in adjusted earnings per share.
That represents significant growth on the $1.82 in adjusted EPS reported in the same period last year.
But Brandt Montour, an analyst who covers gaming, hotels and leisure for Barclays, told TradeWinds that Royal Caribbean is expected to beat Wall Street estimates for the second quarter and to lift its guidance even higher for 2024.
“We expect them to sound upbeat on bookings demand, as well as pricing for itineraries out there for next year,” he said. “We expect the ’25 book of business to be building nicely and we expect them to sound very upbeat about ’25 business.”
In its last quarterly report, Royal Caribbean said it expected adjusted EPS for 2024 to come in at $10.70 to $10.90.
But analyst estimates are already pointing higher, with the average Wall Street expectation coming in at $11.06, according to Yahoo Finance.
The company is expected to report quarterly revenue of $4.04bn on Thursday, on a path towards an estimated $16.4bn top-line figure for the full year.
Cruise industry watchers’ optimism is bolstered by Carnival Corp’s better-than-expected quarterly earnings report last month, as well as messaging from Royal Caribbean at an event in Florida to celebrate its newest ship, the 5,714-berth Utopia of the Seas (built 2024).
Bank of America Securities analyst Andrew Didora wrote in a client note on Tuesday that there are questions about the health of the travel consumer as a result of soft results from airlines.
But his estimate of $11.21 for Royal Caribbean’s 2024 adjusted EPS is above average.
“While cruise companies will certainly be impacted if the travel consumer slows, we view cruise as more insulated from the airline trends, given longer booking curves … and different supply dynamics,” he wrote.
Didora, who has a “neutral” rating on Royal Caribbean’s New York-listed shares, said credit and debit card spending on cruise decreased in June, but he said that amounts to “normalisation” that was accounted for in estimates.
“We see little risk to near-term earnings and expect cruise companies to continue to speak to steady fundamentals this earnings season,” he said.
The expected Royal Caribbean earnings growth adds to a continued upward trajectory that had been only paused by the industry shutdown during the Covid-19 pandemic.
In fact, Montour pointed out that Comcast reported lower-than-expected earnings and its executives noted that cruise and other travel options pulled attendance away from the company’s Universal theme parks.
He will be watching Royal Caribbean on Thursday for insight into how its China business is performing and for an update on the 5,610-berth newbuilding Star of the Seas, which will be delivered next year.
But with investors expecting Royal Caribbean to beat analyst estimates, whether the company delivers strong enough results to move its stock price further from current levels, which rose to a record of more than $173 on Tuesday.
“It’s going to be good?” Montour asked. “Is it good enough?”
