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RCL

Here's Why Royal Caribbean is Sailing Away After Earnings

On Thursday, shares of popular cruise liner Royal Caribbean Cruises RCL are gleefully sailing away, up around 9.2% in afternoon trading on refreshing fourth quarter financial results. RCL stock even hit a new 52-week high of $95.86.

Royal Caribbean reported earnings of $1.23 per share, beating the Zacks Consensus Estimate of $1.22 per share. Investors should note that this figure excludes 2 cents from non-recurring items. Full-year fiscal 2016 adjusted earnings were $6.08 per share, compared to year-over-year earnings of $4.83 per share.

Revenues came in at $1.91 billion, but lagged behind our consensus estimate of $1.96 billion and gained a slight 0.4% year-over-year. The company's full-year revenue of $8.64 billion was higher than Wall Street's forecast of $8.56 billion.

A 4% increase in revenues that were generated once passengers came on board Royal Caribbean's ships helped to offset a 1% dip in passenger ticket revenue, which accounted for 71% of the total revenue mix.

On a constant currency basis, net yields were up 5.3% year-over-year, which was lower than the guidance. Net cruise costs (NCC), excluding fuel prices that decreased 1.9% on a constant currency basis, came in better than the guidance.

"As we enter our DOUBLE-DOUBLE year, we have never been so well positioned," said Richard D. Fain, chairman and chief executive officer. "This program has done what it set out to do - bookings are at record levels, the preference our brands enjoy has never been stronger, we are on the cusp of investment grade ratings, our dividends are at an all-time high, costs have been well managed, and our guests' satisfaction has never been better."

What really sent RCL stock soaring, however, was its blowout full-year 2017 outlook. Royal Caribbean expects adjusted earnings to fall in the range of $6.90 to $7.10 per share, and that's accounting for unfavorable foreign exchange and fuel price trends, well ahead of analysts' prediction of $6.81 per share. The company is also expecting net yields to increase by 4% to 6% on a currency-adjusted basis in 2017, well up from its 3.9% climb last year.

Wall Street was already pretty bullish on Royal Caribbean ahead of its earnings release; Rachel Rothman at Susquehanna upped her price target on its stock from $95 to $99 yesterday.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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