What happened

Shares of Royal Caribbean Cruises Ltd. (NYSE:RCL) were catching a rising tide as the stock gained on a better-than-expected earnings report. The cruise ship operator beat estimates on top and bottom lines, and as a result, the stock was trading 4% higher as of 11:30 a.m EST. 

A cruise ship in a bay with a city skyline in the background.

Image source: Royal Caribbean.

So what

The cruise line said that higher ticket prices on increased onboard spending drove a steady increase in its business. Revenue rose 5% to $2 billion, beating estimates at $1.97 billion, while adjusted earnings per share ticked up 9% to $1.34, handily beating estimates at $1.20. The company touted its achievement of its "Double-Double" or doubling earnings per share from 2014 to 2017, and delivering double-digit return on invested capital.  

CEO Richard Fain said, "Our teams have worked hard to achieve the Double-Double goals. Each of the brands performed excellently during the past year raising their guest satisfaction and employee engagement scores to new heights." As a highly cyclical business, Royal Caribbean, the No. 2 U.S. cruise operator, has benefited from a strong economy both in the U.S. and abroad. Lower fuel prices have helped the industry as well.

Now what

Looking ahead, the company expects another strong performance in 2018, eyeing adjusted earnings per share of $8.55-$8.75, up from $7.53 in 2017, and a 1.5-3.5% increase in net yields, or the amount of revenue it generates per passenger cruising days.

The EPS forecast was in line with analyst estimates at $8.63. 2018 is shaping up to be another solid year for Royal Caribbean and the rest of the cruising industry.


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