Buoyed by robust demand, cruise operator Royal Caribbean (NYSE:RCL) has delivered a strong third-quarter performance and raised its outlook for the full year. Revenue surged 40.5% year-over-year to $4.2 billion, cruising past estimates by nearly $140 million. Further, EPS of $3.85 handily surpassed expectations by $0.39.
The company benefitted from strength in close-in demand and onboard revenue, thanks to healthy consumer spending on experiences. Compared to 2019, gross margin yields increased by 19.1%, and gross cruise costs per available passenger cruise day (APCD) increased by 14.4%.
For the Fiscal Year 2023, RCL expects net yields to increase in the range of 12.9% to 13.4%, compared to 2019. Net cruise costs (NCC), excluding fuel, per APCD are expected to be higher by 7% to 7.5%. The company expects EPS for the year to hover between $6.58 and $6.63.
Moreover, RCL is seeing continued demand acceleration for 2024, with consistently higher bookings than 2019 levels. The company ended the quarter with a cash pile of $3.3 billion and expects to pay down more than $3.5 billion of debt by the end of this year.
Is Royal Caribbean Stock Expected to Go Up?
Overall, the Street has a Moderate Buy consensus rating on Royal Caribbean. The average RCL price target of $121.57 implies a mouth-watering 47.9% potential upside. Meanwhile, RCL’s Icon of the Seas, the largest cruise ship in the world, is slated to begin revenue sailings at the end of January 2024, a key event to keep an eye on.
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