Stock Track | Royal Caribbean Cruises Rally as Strong Demand Fuels Earnings Beat and Raised Guidance

Stock Track10-29 23:18

Royal Caribbean Cruises Ltd. (RCL) shares surged over 5% on October 29, 2024 after the cruise line operator reported better-than-expected third quarter earnings and raised its full-year profit guidance, driven by robust demand for cruises and higher pricing power.

For the quarter ended September 30, 2024, Royal Caribbean posted adjusted earnings per share of $5.20, beating analysts' estimates of $5.03. Total revenues grew 17.5% year-over-year to $4.89 billion, narrowly missing expectations of $4.90 billion.

The company attributed the strong results to accelerating demand and pricing since the prior quarter, exceeding 2023 levels. Consumer spending onboard and pre-cruise purchases continue to significantly exceed 2023 levels, driven by higher participation at higher prices. Load factors in the third quarter reached 111%, reflecting closer-in demand that exceeded expectations.

Buoyed by the solid performance, Royal Caribbean raised its full-year 2024 adjusted earnings per share guidance to a range of $11.57 to $11.62, up from its previous forecast of $11.35 to $11.45. The company expects net yields to increase 10.8% to 11.3% in constant currency for the full year.

Looking ahead to 2025, while still early in the planning process, Royal Caribbean expects earnings per share to start with a "$14 handle," surpassing the current consensus estimate of $13.68. The company cited elevated demand patterns continuing as it builds the business for 2025, supported by its proven formula of moderate capacity growth, moderate yield growth, and strong cost discipline.

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