Shares of Royal Caribbean Group rallied Thursday in choppy trading after the cruise-ship operator reported third-quarter profit that rose well above expectations and raised its full-year outlook.
While higher fuel prices, unfavorable exchange rates and the Hamas-Israel war are weighing on earnings, the company raised its full-year outlook for earnings, excluding those effects. Royal Caribbean has the most exposure to the eastern Mediterranean region compared with its biggest rivals.
The stock
RCL,
was up as much as 5% in the premarket moments after the results were released, and up as much as 2.9% after the opening bell, before turning lower. It then dropped as much as 4.7% to an intraday low of $78.35, the lowest price seen since May 26, before bouncing to a gain of 2.4% in morning trading.
Royal Caribbean’s stock seesaws to a gain after earnings.
FactSet, MarketWatch
Net income jumped to $1.01 billion, or $3.65 a share, from $33 million, or 13 cents a share, in the same period a year ago.
Excluding nonrecurring items, adjusted earnings per share of $3.85 beat the FactSet consensus of $3.46, boosted by stronger close-in (or last-minute) demand and increasing strength in onboard revenue.
Revenue climbed 39% to $4.16 billion, above the FactSet consensus of $4.08 billion.
Passenger ticket revenue jumped 45.5% to $2.94 billion, to beat the FactSet consensus of $2.91 billion, and onboard and other revenue increased 25.4% to $1.22 billion, to exceed expectations of $1.12 billion.
“Bookings remained strong throughout the third quarter, significantly exceeding 2019 levels,” the company said in a statement. “Closer-in demand for 2023 sailings exceeded expectations, contributing to higher load factors at higher prices and higher onboard revenue for the third quarter.”
For 2023, the company said fuel pricing and foreign-currency translation are reducing earnings per share by 18 cents more than previous guidance, while impacted sailings related to the Hamas-Israel war are lowering EPS by 3 cents.
But excluding nonrecurring items, the adjusted EPS guidance range was raised to $6.58-$6.63 from $6-$6.20.
“The strength of our brands and the acceleration of consumer spending on experiences have propelled us toward another outstanding quarter and a robust 2023,” Chief Executive Jason Liberty said. “Looking ahead, we see accelerating demand as we build the business for 2024.”
The stock has tumbled 16.5% over the past three months, while the S&P 500
SPX
has lost 8.8%.
