Casinos & Hotels

Royal Caribbean Earnings: When Bad Is Actually Good for Investors

Chris Lange

Published: August 10, 2020 11:20 am

When Royal Caribbean Cruises Ltd. (NYSE: RCL) reported its most recent quarterly results before the markets opened on Monday, the cruise line operator said that it had a net loss of $6.13 on $175.61 million in revenue in the second quarter. Consensus estimates had called for a $4.82 net loss per share and $43.5 million in revenue. The same period of year reportedly had $2.54 in EPS and $2.81 billion in revenue.

For comparison, the company posted $107.02 million in passenger ticket revenues and $68.58 million in onboard and other revenues. The same period of last year saw $2.02 billion in passenger ticket revenues and $788.80 million in onboard and other revenues.

Royal Caribbean has suffered from a lack of bookings due to the coronavirus pandemic. At the end of the quarter, the firm had $1.8 billion in customer deposits, of which about $300 million were related to fourth-quarter sailings. Nearly 48% of the guests booked on canceled sailings have requested cash refunds.

As it stands, the firm estimates its cash burn to be in the range of about $250 million to $290 million per month on average during this prolonged suspension of operations. This range includes all interest expenses, including the increases driven by the latest capital raises.

On the books, cash and cash equivalents totaled $4.15 billion at the end of the quarter, up from $243.74 million at the end of the previous year.

The company issued no guidance for the third quarter. However, analysts are calling for a net loss of $4.65 per share and $194.83 million in revenue for the quarter.

Royal Caribbean stock traded up about 9% at $56.91, in a 52-week range of $19.25 to $135.32. The consensus price target is $60.00.