The undertow of high fuel costs continues to drag on Royal Caribbean
Royal's second-quarter revenue sailed ahead nearly 15% on strong ticket sales and stronger onboard revenue from gambling, alcohol, spa services operated by the likes of Motley Fool Rule Breakers pick Steiner Leisure
Full-year company guidance now stands below previous expectations at $2.75-$2.85, assuming that fuel costs won't do any further unexpected damage to the bottom line. In any case, Royal plans to keep expansion brisk over the next five years, with a 9.3% increase in cruise ship capacity over this time frame.
This is consistent with growth rates seen in cruising since the 1970s. Royal and larger archrival Carnival
Throw in a reasonable valuation for Royal and a 1.5% dividend yield, and the struggling stock may be worth throwing a life preserver. I don't see much upside as long as fuel continues to mute any potential near-term gains. But short-term pain can prove a good way to prepare for long-term growth, and the industry should have plenty of that is it increasingly expands overseas.
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Fool contributor Ryan Fuhrmann is long shares of Royal and Carnival, but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.