World's second largest cruise company,
Royal Caribbean Cruises Ltd.
), is set to report third-quarter 2013 results on Oct 24. In the
last quarter, it delivered a 130.00% positive surprise. Let's see
how things are shaping up for this announcement.
Factors to Consider
Royal Caribbean anticipates higher costs in the third quarter
owing to its marketing activities and culinary improvement
program, thus, pressurizing its bottom line. Further, the company
is changing its deployment toward Asia, Australia and the
Caribbean to reduce its capacity in geo-political risk-inflicted
Mediterranean and debt-ridden European zones. The benefits of
this initiative will not be realized before 2014, thus negatively
impacting profitability at the current level.
The Grandeur fire accident in May 27, 2013 will continue to
impact on the company's results in the ensuing quarter.
In addition to these, the China-Japan conflict continues to
affect the company's itineraries as well as demand. Apart from
this, increased austerity measures, faltering consumer sentiment
in Europe and the Concordia disaster in Italy continue to be
Royal Caribbean witnessed downward movement of estimates in
the past 30 days for the upcoming quarter as well as full year
2013. The Zacks Consensus Estimate for the upcoming quarter
declined 0.6% to $1.63 over the last 30 days.
Our proven model does not conclusively show that Royal
Caribbean is likely to beat earnings this quarter. That is
because a stock needs to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
Negative Zacks ESP:
The Expected Surprise Prediction or ESP for the company is -4.29%
since the Most Accurate Estimate stands at $1.56 per share, while
the Zacks Consensus Estimate is higher at $1.63.
Zacks Rank #3 (Hold):
Royal Caribbean's Zacks Rank #3 when combined with a negative ESP
makes positive surprise prediction difficult. We caution against
stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into
the earnings announcement, especially when the company is seeing
negative estimate revisions momentum.
Other Stocks to Consider
Other stocks from the consumer discretionary sector that have
both a positive earnings ESP and a favorable Zacks Rank are:
Carmike Cinemas Inc.
) with Earnings ESP of + 4.35% and Zacks Rank #1 (Strong
Wynn Resorts Ltd
), with Earnings ESP of + 8.81% and Zacks Rank #2 (Buy).
Cinemark Holdings Inc.
) with Earnings ESP of + 5.46% and Zacks Rank #3 (Hold).
CARMIKE CINEMA (CKEC): Free Stock Analysis
CINEMARK HLDGS (CNK): Free Stock Analysis
ROYAL CARIBBEAN (RCL): Free Stock Analysis
WYNN RESRTS LTD (WYNN): Free Stock Analysis
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