Earnings season is here, and this week there will be hundreds of popular companies stepping up with their latest financial results. I'll be watching. I imagine you will be watching, too.
A couple of the reports I'm looking forward to are from Royal Caribbean Cruises (RCL 2.03%) and Skechers (SKX +0.00%). Both stocks recently hit fresh multiyear highs. They have earned the upticks, and the gains should keep coming if they continue to deliver blowout financial results.
NYSE: RCL
Key Data Points
Royal Caribbean
There's a lot happening at Royal Caribbean these days. It officially put Icon of the Seas into service over the weekend, now the world's largest cruise ship with room for up to 7,600 passengers along with 2,350 crew members. It will check in with its fourth-quarter results on Thursday morning.
Royal Caribbean investors coasted on friendly waters in 2023. The stock soared 162% last year. There's no denying the monster hit that the industry took when the COVID-19 crisis shut down operations, but passengers are clamoring to get back on these mammoth vessels of leisure travel.
Image source: Getty Images.
Revenue has soared 69% through the first three quarters of 2023. Business will slow now as the year-over-year comps normalize, but there's still more upside for the taking. Royal Caribbean keeps boosting its guidance, and bookings are now ahead of where they were before the pandemic. Wall Street pros are holding out for a 29% increase in this week's report.
The world's second largest cruise line turned profitable in the second quarter of last year. It's getting up to speed quickly. Analysts see Royal Caribbean earning $1.13 a share in this week's quarterly update, reversing a year-ago loss. It could be better than that, as it has topped estimates by at least 11% consistently over the past year.
The stock is cheap despite more than doubling over the past year and hitting a four-year high last month. Royal Caribbean is trading at a reasonable 13 times this new year's projected earnings and just 11 times next year's target. Staying a landlubber can prove costly with cruise line stocks making waves.
NYSE: SKX
Key Data Points
Skechers
It's fair to say that footwear isn't typically exciting. Skechers is also a fairly ho-hum brand in this realm, but there's more soul to the sole here. Skechers reports its fourth-quarter results on Thursday afternoon. It better be a strong report with the the stock hitting an all-time high last week.
The global footwear leader has been surprisingly consistent, posting double-digit revenue growth in 9 of the last 10 years. Growth slowed down a bit last year, up 9% through the first nine months of the year. The real story has been on the bottom line, as Skechers has posted a 54% increase in earnings so far in 2023 with a 69% surge in its latest quarter.
Analysts have been asleep at the forecasting wheel here. It's been cranking out double-digit beats on a regular basis.
| Quarter | EPS Estimate | EPS Actual | Surprise |
|---|---|---|---|
| Q4 2022 | $0.36 | $0.48 | 33% |
| Q1 2023 | $0.61 | $1.02 | 67% |
| Q2 2023 | $0.54 | $0.98 | 82% |
| Q3 2023 | $0.80 | $0.93 | 16% |
Data source: Yahoo! Finance.
Analysts see modest growth for this week's financial update. They're targeting an 8% and 13% increase in revenue and earnings per share, respectively. Momentum suggests it could do better than that, and it will have to if it wants to hit another all-time high by the end of this week.
