Royal Caribbean is the IBD Stock of The Day for Thursday as RCL stock flashed an entry signal on strong volume after the cruise line giant hoisted its outlook late Wednesday. Meanwhile, travel stocks surged after Trip.com cleared Q4 views Wednesday evening.
Riding Demand Wave
Royal Caribbean towed fellow cruise stocks higher after hiking its 2024 earnings guidance Wednesday night, citing stronger-than-expected vacation demand.
The cruise line now expects full-year earnings per share of $9.90-$10.10, up 40 cents from its February target of a record $9.50-$9.70. About 15 cents of that increase reflects an improved revenue outlook in the first quarter.
"Since our last earnings call, robust demand for our vacation experiences has significantly exceeded our initial expectations," CEO Jason Liberty said.
The company attributed the demand increase to its "WAVE season," which offers extra deals from January through March.
Royal Caribbean at the beginning of February cleared fourth-quarter estimates and projected a 40% adjusted earnings jump for 2024 at the time. The company reported adjusted earnings of $1.25 per share, improved from a loss of $1.12 per share the prior year. Revenue leapt about 28% to $3.33 billion but slowed for the sixth straight quarter as sales growth normalized following the Covid-19 pandemic, the company said.
FactSet analysts expected adjusted earnings to improve to $1.14 per share on 29% higher revenue of $3.36 billion.
Rival Carnival Cruise in early February announced it is almost sold out for the first half of the year after seeing record booking volumes since November. However, the company expects to take a 7- to 8-cent hit to its adjusted 2024 earnings per share due to rerouting around the Red Sea conflict. Carnival expects most of the profit impact to occur in Q2 and said it has not seen any effects to its booking trends. The cruise line giant reported better-than-expected Q4 earnings and revenue in late December.
Royal Caribbean Stock
RCL stock rallied more than 7% Thursday to retake its 50-day moving average as daily trade volume spiked 200%, according to MarketSmith charts. That offered investors a follow-on entry opportunity. A push above a stock's 50-day line in strong volume is often considered a bullish indicator, but not necessarily a good place to open a new position.
Shares in December broke out from a 17-week cup base, then rose not quite 20% above the entry. RCL stock pulled back nearly all the way to the buy point — a type of sell signal. Thursday's jump provides a chance to rebuild the position for investors who pared back on the decline.
Royal Caribbean's relative strength line is climbing off recent lows toward late-December highs. RCL stock has an 89 RS Rating out of a best-possible 99. It has a 91 Composite Rating. The Composite Rating combines various technical indicators into one easy-to-read score. Royal Caribbean has an 82 EPS Rating.
Carnival Cruise stock, meanwhile, surged 3.5% during Thursday trade to push back above its 200-day line.
Norwegian Cruise Line Holdings rose 1.1%. NCLH stock is shy of its 10-day line and trading below its other moving averages.
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