Shares of Royal Caribbean Group (RCL) jumped 8.5% on July 28 after the cruise operator reported a better-than-feared Q2 loss and outstanding revenue growth on the back of robust bookings and resurging demand for cruising and onboard spending trends.
RCL’s Q2 Beat
During the quarter, Royal Caribbean’s revenues totaled $2.18 billion, up a whopping 4,190% year-over-year and easily outperforming the $2.1 billion average consensus estimates. Notably, booking volumes rose by 30%, which is higher than the 2019 booking volumes.
Meanwhile, the company reported an adjusted loss of $2.08 per share, which came in better than the street’s estimated loss of $2.30.
RCL’s Website Traffic Indicated Q2 Beat Ahead of Results
The impressive Q2 beat shouldn’t surprise TipRanks’ users who leverage the website traffic screener.
According to the tool, the number of web visits to royalcaribbean.com was up 164.19% year-over-year in June 2022. Moreover, traffic more than doubled in the first six months of this year, up a whopping 111.17%. The spike in website visits indicated that Royal Caribbean could benefit from a rebound in demand, and Q2 results revealed much the same.
RCL Provides Q3 Guidance
Based on current currency exchange rates, fuel rates, and other factors, the company provided guidance for the third quarter of FY2022.
The company forecasts Q3 adjusted earnings in the range of $0.05 to $0.25 per share, while the consensus estimate is pegged at $0.84 per share. Revenues are forecast to be in the range of $2.9 billion to $3 billion, versus the consensus estimate of $2.95 billion.
RCL CEO’s Comments
Royal Caribbean CEO, Jason Liberty, commented, “Cruising remains a very attractive value proposition for vacationers, and today we have an opportunity to further close the value gap to other land-based vacation offerings.”
He further added, “Our liquidity position remains strong, and we are generating positive operating cash flow and EBITDA. With the fleet back in service, we have the full strength of our platform as we continue to execute on our recovery and build on our capabilities for long-term success.”
Wall Street’s Take on RCL
Following Q2 results, Barclays analyst Brandt Montour decreased the price target on Royal Caribbean Cruises to $55 from $56 and reiterated a Buy rating.
The rest of the Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on seven Buys, four Holds, and one Sell. The average Royal Caribbean price target of $79.82 implies 110.83% upside potential to current levels.
Investors Weigh In on RCL
According to the TipRanks Stock Investors tool, investors currently have a Very Positive stance on Royal Caribbean, with 3.4% of investors increasing their exposure to RCL stock over the past 30 days.
Concluding Thoughts
Shares of RCL have lost half of their market capitalization over the past year.
However, freed from the COVID-19 restrictions that hammered the stock’s profitability, RCL returned its full global fleet back to operations, which was supported by a robust demand for travel, cruising, and onboard spending.
The current results indicate that perhaps the worst is over for Royal Caribbean with robust bookings and higher pricing levels going into 2023.
