Royal Caribbean Unveils 25th Ship With Symphony of the Seas

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Royal Caribbean InternationalRCL , a leading cruise company, recently announced the launch of Symphony of the Seas. Set to start sailing in April 2018, Symphony of the Seas is the 25th ship in Royal Caribbean's fleet and the largest in the world, as claimed by the company.

With the potential of accommodating 5,500 guests at double occupancy and 2,774 staterooms, Symphony of the Seas is set to feature a range of exclusive entertainment options, including robot bartenders at the Bionic Bar.

Designed for a wide range of customers, the launch of the ship is in line with Royal Caribbean's focus on increasing capacity to meet the rise in bookings. In fact, with launches like Symphony of the Seas, Harmony of the Seas along with Mein Schiff 6 for its joint venture, TUI Cruises, Royal Caribbean expects to meet the capacity requirement.

Symphony of the Seas will sail in the Mediterranean throughout the summer of 2018, calling on ports in Barcelona and Palma de Mallorca, Spain; Provence, France; and Florence/Pisa, Rome and Naples, Italy, calling Miami, FL its year-round home.

Per the company, demand for European sailings, both in the Mediterranean and Baltics, has been particularly strong in North America. Thus, customers in North America are set to account for a greater percentage of Europe itinerary sourcing. The shift in sourcing puts Royal Caribbean in an advantageous position in terms of higher ticket prices and increased onboard spend. In fact, in the last reported quarter, the company witnessed year-over-year revenue growth of 4.3% owing to costlier tickets.

Notably, for 2017, the company expects total bookings to grow steadily. In fact, Royal Caribbean's booked position for the next 12 months is also strong and ahead of the same time last year, in both rate and volume.

Meanwhile, shares of Royal Caribbean have outperformed its industry year to date. The company's stock has rallied 55.2% when compared to the industry's gain of 25.7%.

However, Royal Caribbean is faced with issues like increased costs which are eating into profits. Apart from increase in fuel prices, higher investments to generate more revenues are adding to the company's costs. In fact, the company expects net cruise costs, excluding fuel, to be up roughly 4% year over year in the third quarter, on a constant-currency basis. This increase in the cost metric primarily reflects a year-over-year capacity reduction in the quarter.

Over the last 60 days, the company has been witnessing a slight downward revision in earnings estimates, reflecting analyst concerns surrounding the stock. In the said time period, earnings estimates for the current quarter and year have moved down 0.3% and 0.4%, respectively.

Nonetheless, a consumer-friendly approach and relentless efforts in capacity building position this Zacks Rank #3 (Hold) company well for revenue growth.

Stocks to Consider

A few better-ranked stocks from the industry are AMC Entertainment Holdings, Inc. AMC , Drive Shack Inc. DS and International Speedway Corporation ISCA . All the companies carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.

AMC Entertainment's next-year earnings are projected to grow 151.1%.

Next-year earnings for Drive Shack are estimated to increase 86.1%.

International Speedway's current-year earnings are expected to grow 6.1%.

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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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