Royal Caribbean is the IBD Stock Of The Day for Tuesday. Shares sailed higher after the cruise operator cleared Q4 earnings estimates and provided a solid 2025 outlook. The company also announced plans to target new river-cruise markets.
Royal Caribbean reported a 30% increase in earnings to $1.63 per share adjusted, beating FactSet expectations for $1.50 per share. Revenue jumped almost 13% to $3.76 billion, which matched analyst views.
The company noted that bookings have accelerated since its last update, resulting in the best five-week booking period in its history. Meanwhile, booked load factors remain in line with prior years, and at higher rates. Guest spending for onboard and pre-cruise purchases continues to exceed previous years, driven by greater participation levels at higher prices, Royal Caribbean reported.
"Our strong booked position allows us to optimize our yield profile and drive margin expansion and strong financial returns," CFO Naftali Holtz said in the earnings release. "Our formula for success — moderate capacity growth, moderate yield growth, and strong cost discipline — is expected to deliver us 23% adjusted earnings growth in 2025."
Royal Caribbean forecasts 2025 adjusted earnings range from $14.35 to $14.65 per share, with the midpoint ahead of FactSet expectations for $14.45.
The company expects its net yields to increase ranging from 2.5% to 4.5% on a constant currency basis. The cruise line anticipates $1.17 billion in fuel expenses for the year.
New River Cruises
Royal Caribbean also announced the launch of Celebrity River Cruises. Celebrity Cruises, a subsidiary of Royal Caribbean, signed an order for 10 new ships that will begin sailing in 2027, with bookings to begin this year.
The new river cruises are an extension of Celebrity's premium offering, which provides "signature hospitality and unique itinerary offerings" through various historically significant cities. Celebrity River Cruises plans to start sailing in Europe.
"With about half of our guests having experienced or intending to vacation on a river cruise, we know they will enjoy Celebrity's elevated offering on the river," Royal Caribbean CEO Jason Liberty said. "By leveraging our valuable loyalty programs across our three brands, we will deepen customer engagement and further our ability to keep guests within our ecosystem of vacation offerings."
Royal Caribbean Stock
RCL stock rallied nearly 12% Tuesday in massive volume, jumping back above its 50-day moving average, and topping an early entry at 250.11.
Royal Caribbean trades in a buy zone for an eight-week flat base with a 258.70 buy point, plotted from RCL's record high from Dec. 9.
The current buy zone, which stretches 5% beyond the buy point, extends to 271.63.
Meanwhile, rival Carnival jumped 8.1% Tuesday, clearing a 27.16 flat base entry.
River cruise operator Viking ticked up a fraction Tuesday. VIK stock initially retreated on Royal Caribbean's announcement. Shares are holding in a buy zone, above a 47.62 entry, near record highs.
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