Key Takeaways
- Royal Caribbean delivered Q1 adjusted earnings per share of $3.60, surpassing the analyst consensus of $3.20
- Revenue increased 11% year-over-year, reaching $4.45 billion
- The company reduced its full-year EPS forecast to $17.10–$17.50 from $17.70–$18.10, citing elevated fuel expenses and Middle East disruptions
- The revised guidance still exceeds Wall Street’s consensus estimate of $17.09
- Shares of RCL surged 8% in premarket trading, bouncing back from an 8% decline in April
Royal Caribbean delivered impressive first-quarter results that exceeded Wall Street’s earnings forecasts, even as the stock lagged behind the broader market throughout April.
The cruise operator reported net income of $950 million, translating to $3.48 per share, representing a significant increase from $730 million, or $2.70 per share, recorded in the corresponding quarter last year.
When adjusted for one-time items, earnings reached $3.60 per share. This figure comfortably surpassed the $3.20 consensus estimate that Wall Street analysts had projected.
Royal Caribbean Cruises Ltd., RCL
Revenue rose 11% from the prior-year period to $4.45 billion, falling just short of the $4.46 billion that analysts had anticipated.
Shares rallied 8% during premarket hours on Thursday — a significant reversal for a stock that had declined 8% during April, completely missing the S&P 500’s strongest monthly performance since November 2020.
The cruise line operator did revise its full-year adjusted EPS guidance downward. The updated forecast calls for $17.10 to $17.50, compared to the previous range of $17.70 to $18.10.
Management attributed the revision to two primary headwinds: escalating fuel expenses and diminished revenue from Middle Eastern cruise routes affected by the ongoing Iran conflict.
After accounting for hedging activities, the fuel cost increase amounts to approximately $0.62 per share beyond prior projections — translating to roughly $1.3 billion in total impact. While substantial, the figure came in lower than market expectations.
Revised Forecast Still Beats Consensus
Despite the downward adjustment, the midpoint of Royal Caribbean’s updated annual EPS guidance remains above the $17.09 analyst consensus. This likely explains the positive market reaction.
For the second quarter, management projected net yield growth of 0.9% alongside adjusted EPS between $3.83 and $3.93. The Street had been modeling $4.02, meaning the Q2 outlook fell slightly short of expectations.
For the complete fiscal year, the company anticipates net yield expansion in the range of 2.3% to 3.3%.
CEO Jason Liberty highlighted robust consumer appetite for the company’s offerings and emphasized what he described as a “fortified balance sheet” as catalysts for sustained double-digit revenue and earnings expansion through 2026.
Booking Trends Show Resilience
Booking activity experienced a temporary slowdown during March and into early April. The company noted that demand for Mediterranean voyages and West Coast Mexico cruises weakened amid geopolitical uncertainty.
However, Royal Caribbean reported that bookings have since rebounded and are currently tracking above year-ago levels.
This represents an important signal given the headwinds facing the cruise industry this year.
Elevated oil prices stemming from Middle East geopolitical tensions have increased operating costs industry-wide, impacting Royal Caribbean alongside competitors Carnival and Norwegian Cruise Lines.
Some market observers had expressed concerns that consumers facing higher gasoline prices at home might curtail discretionary spending on travel experiences like cruises.
Yet Royal Caribbean’s booking momentum suggests otherwise — customer demand appears resilient.
The company’s 8% premarket rally on Thursday indicates investor confidence that the guidance reduction was less severe than anticipated, and that fundamental demand trends remain healthy entering the critical summer travel period.
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