Royal Caribbean Group RCL is scheduled to release second-quarter 2023 results on Jul 27, 2023. In the previous quarter, RCL delivered an earnings surprise of 67.6%.

Trend in Estimate Revision

The Zacks Consensus Estimate for Royal Caribbean’s second-quarter earnings per share is pegged at $1.58. In the prior-year quarter, RCL reported a loss per share of $2.08.

For revenues, the consensus mark is pegged at $3,378 million. The projection suggests an increase of 54.7% from the year-ago quarter’s reported figure.

Let’s take a look at how things have shaped up for the quarter to be reported.

Factors at Play

Royal Caribbean’s second-quarter top line is expected to have increased year over year on the back of improvements in booking activities, strong pricing environment and continued strength from onboard revenue areas. Robust demand, courtesy of its digital initiatives, ship upgrades and enhanced product offerings are likely to have aided the company’s performance in the to-be-reported quarter.

The Zacks Consensus Estimate for second-quarter passenger ticket revenues and onboard and other revenues is currently pegged at $2,284 million and $1,109 million, respectively, indicating growth from the prior-year quarter’s reported figures of $1,418 million and $766 million.

Our model estimates second-quarter passenger ticket revenues to rise 41.4% year over year to $2,004.8 million. We expect onboard and other revenues to rise 67.3% year over year to $1,281.3 million.

The improvement in load factors (courtesy of a rise in close-in bookings at higher prices) are likely to have paved a path for yield improvements in the second quarter. The company anticipates net yields to rise 9.6-10.1% (on a reported basis) and 10.1-10.6% (constant-currency basis) from 2019 levels. Our model predicts second-quarter net yields at $234.8 million (on a reported basis) and $239 million (constant-currency basis).

Elevated costs concerning fuel and food are likely to have hurt margins in the second quarter. Our model predicts total cruise operating costs to rise 5.8% year over year to $1,788.6 million.

The company expects net cruise costs (excluding fuel per APCD) for 2023 to increase 8.6% (on a reported basis) and 8.9% (constant currency) in the to-be-reported quarter. Per our model, second-quarter net cruise costs (excluding fuel per APCD) is estimated at $117.4 million (on a reported basis) and $118.3 million (constant-currency basis).

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Royal Caribbean this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat on earnings. But that’s not the case here.

Earnings ESP: Royal Caribbean has an Earnings ESP of -1.29%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Royal Caribbean has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat on Earnings

Here are some stocks from the Zacks Consumer Discretionary sector that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat:

MGM Resorts International MGM has an Earnings ESP of +19.43% and a Zacks Rank #2.

Shares of MGM Resorts have increased 59.2% in the past year. MGM’s earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 81%.

Boyd Gaming Corporation BYD has an Earnings ESP of +2.92% and a Zacks Rank of 3.

Shares of Boyd Gaming have gained 29.1% in the past year. BYD’s earnings beat estimates in all the trailing four quarters, the average negative surprise being 13.7%.

Hilton Worldwide Holdings Inc. HLT has an Earnings ESP of +0.82% and a Zacks Rank of 3.

Shares of Hilton have gained 23.1% in the past year. HLT’s earnings beat estimates in all the trailing four quarters, the average surprise being 17.2%.

Royal Caribbean Cruises Ltd. (RCL): Free Stock Analysis Report

MGM Resorts International (MGM): Free Stock Analysis Report

Boyd Gaming Corporation (BYD): Free Stock Analysis Report

Hilton Worldwide Holdings Inc. (HLT): Free Stock Analysis Report

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