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Royal Caribbean (RCL) Beats on Q4 Earnings, Misses Sales

Royal Caribbean Cruises Ltd.RCL posted mixed fourth-quarter 2016 results, wherein the bottom line outpaced the Zacks Consensus Estimate while the top line lagged the same.

Adjusted earnings of $1.23 per share were 0.8% ahead of the Zacks Consensus Estimate and 2.5% ahead of management's guidance of $1.20. The outperformance came on the back of strong yields and positive movement in fuel. Further, earnings jumped 33.7% from the year-ago tally of 92 cents, due to higher revenues and a lower share count.

Total revenue increased 0.5% year over year to $1.91 billion, driven by higher onboard spending partly offset by lower passenger ticket revenues. However, revenues missed the Zacks Consensus Estimate of $1.96 billion by 2.6%.

Quarter Highlights

On a constant currency basis, net yields increased 5.3% year over year, lower than guidance, primarily due to lower close-in pricing.

Passenger ticket revenues were down approximately 1.2% to nearly $1.36 billion. Onboard and other revenues, however, increased 4.4% to $554.9 million.

Net cruise costs (NCC), excluding fuel, decreased 1.9% on a constant currency basis, better than management's guidance, driven by operational efficiencies.

Total cruise operating expenses decreased 4.3% year over year to $1.12 billion, mainly due to a decline in commissions, transportation and other costs, fuel, food, payroll and related as well as onboard and other expenses. The decrease was partly offset by higher other operating costs.

2016 Results

For 2016, earnings were $6.08 per share, up 25.9% from 2015. Further, earnings topped the Zacks Consensus Estimate of $6.07 by 0.2%.

Revenues came in at $8.50 billion, up 2.4% year over year, missing the Zacks Consensus Estimate of $8.65 by 1.7%.

Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise

Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise | Royal Caribbean Cruises Ltd. Quote

1Q17 Guidance

Royal Caribbean expects adjusted earnings per share of 90 cents per share in the quarter, higher than the Zacks Consensus Estimate of 75 cents per share.

Constant-currency net yields are projected to increase in the range of 4.5-5%.

NCC, excluding fuel, is likely to be down about 4.5% at constant currency.

2017 Guidance

Royal Caribbean issued its adjusted EPS guidance in the range of $6.90-$7.10. The Zacks Consensus Estimate for 2017 is pegged at $6.78.

The company expects net yields to increase in the range of 4% to 6%, on a constant currency basis, for the full year.

NCC, excluding fuel, on a constant currency basis, is expected to be flat.

At this point of time, the company's 2017 itineraries are booked ahead of last year in both rate and volume. Strength from North American consumers is driving positive trends for North American and European products. These trends, along with a positive outlook for Australia and a solid booked position in China for the first half of 2017, are likely to bolster the company's growth in 2017.

Zacks Rank & Stocks to Consider

Royal Caribbean presently has a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include:

Planet Fitness, Inc. PLNT with a Zacks Rank #2 (Buy). The company has posted positive earnings surprises in each of the trailing four quarters, with an average beat of 16.28%.

SeaWorld Entertainment, Inc. SEAS is also a Zacks Rank #2 company. For fiscal 2017, its EPS is expected to grow a staggering 159%, while expectation of the analysts from the industry is pegged at 14.8%.

Extended Stay America, Inc. STAY has also beaten estimates in each of its trailing four quarters, recording an average beat of 8.02%. The company currently holds a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

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Royal Caribbean Cruises Ltd. (RCL): Free Stock Analysis Report

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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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