Royal Caribbean Steams Ahead

Cruise line operator and Motley Fool Stock Advisor pick Royal Caribbean (NYSE: RCL  ) reported first-quarter earnings this morning, and the numbers suggest that cruise vacations are holding up well in a slow economy. Total sales improved 16.8%, while profitability surged ahead nearly ninefold on increased ship capacity and higher revenue per passenger.

The only negative for the quarter was those pesky fuel costs, which rose 53% to $158 million. Fortunately, booking trends were strong, and net yields -- an industry measure for net revenue per available passenger cruise days (APCD) -- grew an impressive 7.1%. Management also did a nice job of controlling costs, as net cruise costs per APCD increased just 2.9% despite the jump in fuel. Excluding the fuel prices, net cruise costs decreased 1%.

As a result, quarterly earnings of $0.35 handily beat analyst projections, but management lowered its full-year guidance on the expectation that current high fuel costs will stay that way for at least the rest of 2008. Earnings could hit close to $3 per share, but could also end up about flat from 2007 (when they came in at $2.82) if high fuel costs persist, or if strong booking trends catch a cold from a chilly economic climate

Royal isn't the only cruiser facing these trends. Archrival Carnival (NYSE: CCL  ) (NYSE: CUK  ) is in the same boat in regard to fuel spending, and Motley Fool Rule Breaker recommendation Steiner Leisure (Nasdaq: STNR  ) , which runs the spas in many cruise ships, has traded down in sympathy, even though operating results still look pretty good. The key culprit is fuel costs, and while you have to credit management with doing an excellent job of running its business with the long term in mind, these stocks aren't likely to move until energy prices fall back below sea level. 

For related Foolishness:

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 629564, ~/Articles/ArticleHandler.aspx, 10/21/2016 11:30:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,077.19 -85.16 -0.47%
S&P 500 2,136.75 -4.59 -0.21%
NASD 5,250.97 9.14 0.17%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 11:14 AM
RCL $69.62 Down -0.86 -1.22%
Royal Caribbean CAPS Rating: ***
CCL $46.60 Down -0.60 -1.27%
Carnival CAPS Rating: **
CUK $46.66 Down -0.54 -1.14%
Carnival CAPS Rating: **
STNR.DL $0.00 Down +0.00 +0.00%
Steiner Leisure CAPS Rating: *****