Back to top

Image: Bigstock

Here's Why Royal Caribbean (RCL) Fell More Than Broader Market

Read MoreHide Full Article

Royal Caribbean (RCL - Free Report) closed at $158.02 in the latest trading session, marking a -0.47% move from the prior day. The stock fell short of the S&P 500, which registered a loss of 0.3% for the day. On the other hand, the Dow registered a loss of 0.54%, and the technology-centric Nasdaq increased by 0.25%.

Coming into today, shares of the cruise operator had gained 7.62% in the past month. In that same time, the Consumer Discretionary sector gained 5.12%, while the S&P 500 gained 3.42%.

The investment community will be closely monitoring the performance of Royal Caribbean in its forthcoming earnings report. The company is expected to report EPS of $4.98, up 29.35% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $4.84 billion, up 16.28% from the prior-year quarter.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $11.50 per share and a revenue of $16.41 billion, representing changes of +69.87% and +18.1%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Royal Caribbean. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.39% higher. Royal Caribbean is currently sporting a Zacks Rank of #1 (Strong Buy).

From a valuation perspective, Royal Caribbean is currently exchanging hands at a Forward P/E ratio of 13.81. This signifies a discount in comparison to the average Forward P/E of 18.68 for its industry.

One should further note that RCL currently holds a PEG ratio of 0.46. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. The average PEG ratio for the Leisure and Recreation Services industry stood at 1.06 at the close of the market yesterday.

The Leisure and Recreation Services industry is part of the Consumer Discretionary sector. This industry, currently bearing a Zacks Industry Rank of 170, finds itself in the bottom 33% echelons of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Royal Caribbean Cruises Ltd. (RCL) - free report >>

Published in