Why Royal Caribbean Earnings Are So Great

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Royal Caribbean Cruises Ltd. (NYSE: RCL) released its fourth-quarter earnings report before markets opened on Thursday. The company said that it had $1.23 in earnings per share (EPS) and $1.91 billion in revenue, versus consensus estimates that called for $1.21 in EPS and $1.97 billion in revenue. The same period from last year had $0.94 in EPS and $1.9 billion in revenue.

Recent changes in the foreign exchange markets and fuel prices have created headwinds for Royal Caribbean. However, the company was able to overcome these in 2016 due to dropping Net Cruise Costs (NCC) which excluding fuel were up only 0.9% on a constant currency basis (up 3% as reported).

In terms of guidance the company expects to see EPS in the range of $6.90 to $7.10 for 2017 and EPS to be $0.90 in the first quarter. There are consensus estimates calling for $6.81 in EPS for the full year and $0.72 in EPS for the first quarter.

On the books, cash and cash equivalents totaled $132.6 million at the end of the quarter, versus $121.6 million at the end of the previous year.

Richard D. Fain, Chairman and CEO, commented:

As we enter our DOUBLE-DOUBLE year, we have never been so well positioned. 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.  The DOUBLE-DOUBLE program helped reinforce the mindset and discipline across our organization which has gotten us here.  For that I thank every one of the men and women whose passion and efforts are driving this performance. While currency and fuel are both significant negatives at the moment, our business continues to thrive.

Shares of Royal Caribbean were last trading up over 9% at $95.90, with a consensus analyst price target of $92.56 and a 52-week trading range of $64.21 to $95.91.