Royal Caribbean Cruises Ltd. 's ( RCL ) first-quarter
2013 earnings of 35 cents per share surpassed the Zacks Consensus
Estimate of 20 cents per share by 75% and also increased 66.7% year
over year. Improvement in top-line coupled with efficient cost
control measures boosted earnings during the quarter.
Total revenues in the quarter inched up 4.2% year over year to
$1.9 billion, in line with the Zacks Consensus Estimate. Higher net
yields boosted the revenues during the quarter.
Net yields nudged up 3.6% year over year on a constant-currency
basis backed by a 3.1% improvement in net ticket revenues and a
7.3% increase in on-board revenues. Better-than-expected close-in
bookings, higher on-board spending, better pricing and improving
occupancy rate drove the net yields during the quarter. The
occupancy rate increased 30 basis points (bps) to 104.9% in the
Total cruise operating expenses increased 2.2% year over year to
$1.3 billion mainly due to a 13% rise in on-board and other
expenses and 5.2% and 5.5% increase in food expenses and fuel
costs, respectively. Net cruise costs (fuel excluded) declined 0.5%
on a constant-currency basis as marketing costs have declined
during the quarter.
For the second quarter of 2013, Royal Caribbean expects its
earnings to range between 10-15 cents per share. The Zacks
Consensus Estimate for second quarter is 18 cents per share.
Earnings in the quarter are expected to be affected by higher fuel
pricing and exchange rate fluctuation.
Net yields are expected to increase 3% at constant-currency
basis in the second quarter. Excluding fuel expenses, net cruise
costs are also estimated to increase 3% in constant currency. Fuel
costs are estimated to be $236 million per metric ton.
Full-Year 2013 Outlook Retained
Royal Caribbean has retained its earnings per share and net
yield guidance for 2013. Management expects its earnings per share
in the range of $2.30-$2.50 per share in 2013. Net revenue yield is
expected to increase 2%-4% at constant currency. Net cruise cost
excluding fuel costs is projected to increase 2%-3% in constant
currency. Fuel expenses are expected to be $928 million per metric
ton, down from the previous estimate of $960 million per metric
Amid an uncertain economic condition in Europe, Royal Caribbean
has been witnessing strong demand in the region in 2013. The U.S.
market is also showing healthy signs in terms of bookings.
Given Royal Caribbean's relatively stabilized booking patterns,
cost containment efforts, and better-than-expected on-board revenue
gains, we remain optimistic on the world's second-largest cruise
However, higher costs due to deployment changes and several
marketing activities remain major causes of concern. In addition to
these, austerity measures and faltering consumer sentiment in
Europe continues to bother the company.
Another cruise operator, Carnival Corporation (
CCL ) is also
recovering at a steady pace from the Costa Concordia cruise
disaster. Carnival's earnings in the first quarter were ahead of
the Zacks Consensus Estimate but its revenues missed the same by
Royal Caribbean currently carries a Zacks Rank #3 (Hold). Some
other stocks in the entertainment industry that are expected to
perform well include Carmike Cinemas Inc. (
CKEC ) and
Speedway Motorsports Inc. ( TRK ) both carrying a
Zacks Rank #1 (Strong Buy).CARNIVAL CORP (CCL): Free Stock Analysis ReportCARMIKE CINEMA (CKEC): Free Stock Analysis
ReportROYAL CARIBBEAN (RCL): Free Stock Analysis
ReportSPEEDWAY MOTORS (TRK): Free Stock Analysis
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