Earnings Season Overview - The report previews the second quarter earnings season, focusing on hot stocks and their potential to maintain momentum [1][2] - Zacks Investment Research will provide ongoing coverage of earnings season through YouTube videos, podcasts, and social media updates [22][23][24] Featured Stocks and Analysis - **Costco:** Exhibits steady growth with mostly double-digit earnings increases year after year, but shares are struggling to break out; valuation is high at 54 times earnings [3][4][5] - **Palo Alto Networks:** Demonstrates consistent earnings growth with no misses in the last five years; shares are attempting to break out to new highs, up 103% year-to-date [6][7][8] - **Microsoft:** Shows a strong earnings surprise track record with only one miss; shares are up 182% year-to-date, reaching new all-time highs; earnings growth is expected through 2027; trading at 33 times earnings [9][10][11][12] - **Royal Caribbean:** Has a perfect earnings track record since 2022, with shares up 442% year-to-date; strong bookings for 2025 and 2026 are driving growth; trading at 22 times earnings [13][14][15][16][17][18] - **D-Wave Quantum:** Shares are up 92% year-to-date with a 60% beat last quarter; guidance is a key factor; earnings are not yet positive [18][19][20] Key Themes - Consistent earnings growth and positive earnings surprises are common features among the highlighted hot stocks [8] - Consumer spending remains strong, particularly in the travel sector, despite tariff concerns [13][15] - The performance of the stock market influences consumer confidence and spending habits, impacting sectors like cruise lines [15]

Core Viewpoint - The consumer's determination to travel is driving a significant increase in global air passenger traffic, with a 15% year-over-year growth in the first half of 2025, particularly strong in Asia-Pacific and Europe [1][2]. Group 1: Travel Market Dynamics - Despite a nearly 10% decline in the U.S. dollar, which typically increases the cost of international travel, strong wage growth in the U.S. is offsetting this effect, leading to robust demand for travel [2]. - The combination of increased income and pent-up demand for previously inaccessible international destinations is fueling the travel market [2]. Group 2: Company-Specific Insights Booking Holdings - Booking Holdings Inc. (NASDAQ: BKNG) is trading at over $5,600 per share, with a 12-month stock price forecast of $5,388.37, indicating a potential downside of 5.84% [4]. - The company reported earnings exceeding expectations by nearly 30% in its most recent quarter, showcasing its pricing power and impressive 86% gross margins, driven by artificial intelligence [5]. - Booking's strongest periods are typically in the second and third quarters, supported by demand for travel to Asia Pacific and Europe [5]. Marriott International - Marriott International (NYSE: MAR) has a current stock price of $280.08, with a 12-month forecast of $275.90, suggesting a downside of 1.49% [7]. - The company reported a global RevPAR increase of approximately 4% in Q1 2025, with international RevPAR up more than 6%, particularly strong in Asia Pacific [8]. - Marriott's diverse brand portfolio and expansion into luxury and upscale properties allow it to target less price-sensitive consumers [9]. Royal Caribbean - Royal Caribbean Cruises Ltd. (NYSE: RCL) has a current stock price of $334.10, with a 12-month forecast of $280.40, indicating a downside of 16.07% [11]. - The cruise industry is experiencing a recovery, with Royal Caribbean's stock up over 106% in the last 12 months and more than 40% in 2025 [12]. - The company has significantly reduced its debt, refinancing approximately $3 billion in short-term debt and repaying about $2.1 billion in principal, resulting in a debt-to-equity ratio of 2.21, which is more than 60% lower than its 2022 peak [13].

Core Insights - Royal Caribbean Cruises Ltd. is focusing on its loyalty program strategy to enhance guest engagement and drive additional revenues, with strong cruising demand expected to continue into 2025 [1][8] - Customer deposits reached $6.33 billion as of March 31, 2025, an increase from $5.5 billion in the previous year, indicating robust forward demand [1] Loyalty Program and Guest Engagement - Loyalty members accounted for nearly 40% of bookings in 2024 and spent 25% more per trip, demonstrating strong engagement and supporting the company's retention efforts for 2025 and beyond [2] - There is a notable increase in cross-brand bookings among loyalty members, indicating a preference for staying within the Royal Caribbean Group ecosystem [2] - Loyalty members show a higher inclination for direct bookings, aided by a doubling of mobile app usage for bookings in 2025, which helps reduce distribution costs [2] Enhancements and New Offerings - Royal Caribbean is enhancing its guest ecosystem with destination-driven improvements, such as the upcoming Royal Beach Club in Nassau, aimed at increasing guest satisfaction and maximizing ancillary spending [3] - The company is building loyalty across various touchpoints, including exclusive locations and digital booking flows, which supports higher guest value and repeat travel [3] Industry Trends - Other cruise lines, such as Carnival Corporation and Norwegian Cruise Line, are also evolving their loyalty strategies to enhance guest retention and spending [4] - Carnival is shifting its loyalty model to reward total spend rather than just cruise nights, with a new program called "Carnival Rewards" aimed at creating a more personalized loyalty experience [5] - Norwegian Cruise is focusing on operational refinements and experiential upgrades without introducing a spend-based loyalty framework, maintaining its loyalty proposition based on cruise frequency [6] Financial Performance and Valuation - Royal Caribbean's shares have increased by 86.3% over the past three months, outperforming the industry's growth of 43% [7] - The company trades at a forward price-to-sales ratio of 4.82X, significantly higher than the industry's average of 2.5X [10] - The Zacks Consensus Estimate for RCL's earnings in 2025 and 2026 indicates a year-over-year increase of 30.7% and 14.5%, respectively, with EPS estimates for 2025 having risen in the past 60 days [12]

Core Insights - Royal Caribbean (RCL) experienced a significant trading signal known as Power Inflow at a price of $331.57, indicating a potential uptrend and a bullish sign for traders [1][5]. Group 1: Power Inflow and Market Trends - The Power Inflow occurred within the first two hours of the market open, suggesting the overall direction of the stock for the remainder of the day, driven by institutional activity [3]. - Following the Power Inflow, RCL's stock reached a high price of $334.48 and a close price of $334.26, resulting in returns of 0.9% and 0.8% respectively [7]. Group 2: Order Flow Analytics - Order flow analytics, which involves analyzing the flow of buy and sell orders, helps traders gain insights into market conditions and make informed trading decisions [2][4]. - The Power Inflow is interpreted as a bullish signal by active traders, emphasizing the importance of understanding institutional movements in the market [2][5].

Core Points - Royal Caribbean is set to launch the Royal Beach Club Paradise Island in The Bahamas, offering an all-inclusive beach day experience starting December 2025 [1][2][12] - The beach club will feature amenities such as pristine beaches, pools, the world's largest swim-up bar, and various dining options, all infused with Bahamian culture [2][8] Summary by Category Beach Club Features - The Royal Beach Club will include two beaches, three pools, and the Floating Flamingo swim-up bar, providing a vibrant atmosphere for guests [8] - Unique offerings include the Ultimate Family Cabana, a two-story private retreat accommodating up to 12 guests, featuring a whirlpool, frozen drink machine, and a slide [4][10] Dining and Beverage Options - Guests can enjoy a variety of dining experiences across three beach grills and 10 bars, with all-inclusive day passes available [8][9] - Day pass pricing starts at $169.99 for adults with various options for different age groups, including free access for children under 3 [11] Booking and Availability - Bookings for the Royal Beach Club experience are now open for guests sailing to Nassau starting late December 2025 [1][12] - The beach club is part of Royal Caribbean's expansion of exclusive destinations, with future locations planned in Cozumel, Lelepa, and Mexico [12]

Company Performance - Royal Caribbean's stock closed at $313.14, reflecting a +1.17% change from the previous day's closing price, outperforming the S&P 500's gain of 0.52% [1] - Over the past month, Royal Caribbean shares have increased by 20.45%, significantly surpassing the Consumer Discretionary sector's gain of 5.55% and the S&P 500's gain of 4.27% [1] Upcoming Earnings - The upcoming earnings per share (EPS) for Royal Caribbean is projected at $4.04, indicating a 25.86% increase compared to the same quarter last year [2] - Revenue is expected to reach $4.54 billion, representing a 10.44% growth year-over-year [2] Full Year Estimates - For the full year, earnings are projected at $15.42 per share and revenue at $18.03 billion, showing increases of +30.68% and +9.36% respectively from the previous year [3] - Recent analyst estimate revisions suggest positive near-term business trends, which may indicate a favorable business outlook [3] Valuation Metrics - Royal Caribbean is currently trading at a Forward P/E ratio of 20.08, which is lower than the industry average Forward P/E of 20.36 [6] - The company has a PEG ratio of 0.92, compared to the Leisure and Recreation Services industry's average PEG ratio of 1.84 [6] Industry Context - The Leisure and Recreation Services industry, part of the Consumer Discretionary sector, holds a Zacks Industry Rank of 58, placing it in the top 24% of over 250 industries [7] - Historically, the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Insights - Consumer demand for experiential travel is rebounding, benefiting cruise operators like Carnival Corporation & plc (CCL) and Royal Caribbean Cruises Ltd. (RCL) [1] - Both companies are leveraging strong brand portfolios and improving fundamentals to capitalize on elevated demand and pricing power [1] Carnival Corporation (CCL) - Carnival is achieving robust yield growth and operational momentum, exceeding its 2026 targets for EBITDA per berth growth and return on invested capital 18 months ahead of schedule [3] - The company is set to launch Celebration Key, a flagship private Caribbean destination, and is enhancing its "Paradise Collection" strategy with upgrades to existing destinations [4] - Carnival is revamping its fleet and launching a new loyalty program, Carnival Rewards, expected to boost guest engagement [5] - Financially, Carnival has refinanced $7 billion of debt and improved its net debt-to-EBITDA ratio from 4.1x to 3.7x in Q2 2025, focusing on regaining investment-grade status [6] Royal Caribbean Cruises Ltd. (RCL) - Royal Caribbean is executing its "Perfecta Performance" strategy, reporting yield growth of 5.6% and a 35% EBITDA margin in Q1 2025, driven by strong demand and pricing power [7] - The company is expanding its exclusive destination portfolio with the Royal Beach Club in Nassau, aimed at enhancing guest engagement and boosting ancillary revenues [8] - RCL's digital initiatives, including a widely adopted mobile app, are improving direct bookings and revenue capture [9] - However, RCL faces near-term cost pressures related to ship deployment and elevated expenses tied to destination rollouts and dry dock activities [10] Financial Performance and Valuation - The Zacks Consensus Estimate for Carnival's fiscal 2025 sales and EPS suggests increases of 5.4% and 38%, respectively, with earnings estimates rising 3.8% in the past 60 days [11] - For Royal Caribbean, the estimates indicate year-over-year increases of 9.4% in sales and 30.7% in EPS, with a 6% rise in earnings estimates over the same period [13] - Carnival stock has increased by 31.7% over the past three months, while Royal Caribbean shares have risen by 42.6% [15] - Carnival's forward P/E ratio is 12.92X, below the industry average of 18.59X, while RCL's is 17.92X [18] Investment Outlook - Carnival presents a more attractive near-term buying opportunity due to operational efficiency and financial gains, while RCL may require a wait-and-see approach due to cost pressures [27][28]

Core Insights - Silversea has announced a new Venetian Society Reunion Voyage aboard Silver Shadow, scheduled to depart from Nice on June 19, 2026, for a 12-day round-trip itinerary [1][2] - The voyage will include visits to iconic Italian destinations and offer unique experiences both onboard and ashore, enhancing the community feel among past and new guests [3][10] Itinerary Highlights - The voyage will visit Livorno (Tuscany), Porto Santo Stefano, Civitavecchia (Rome), Valletta (Malta), Giardini Naxos (Sicily), Salerno, Ponza, Portoferraio (Elba), and Portofino, returning to Nice on July 1, 2026 [2] - Guests will have the opportunity to participate in various shore experiences, including a three-day Tuscany adventure, wine tasting at Antinori "Le Mortelle" Winery, and a Sicilian cooking class [4][6][8] Special Features - The voyage will be hosted by Bert Hernandez, president of Silversea, and will include onboard receptions, enriched entertainment, and special experiences ashore [2][3] - Venetian Society members will receive perks such as a five percent discount on cruise fares and commemorative gifts [2] Culinary Experiences - Guests can enjoy exclusive culinary experiences, such as a private lunch with wine pairings in San Miniato and a farm-to-table picnic at La Portofinese Eco-Farm [5][9] - The S.A.L.T. program will offer immersive culinary tours that highlight local gastronomy and winemaking traditions [5][9] Company Overview - Silversea is recognized as a leading experiential luxury and expedition travel brand, offering immersive experiences across all seven continents [10] - The company is part of the Royal Caribbean Group, which operates a global fleet of 67 ships across five brands [11]

Consumer Sentiment and Travel Industry Outlook - Consumer sentiment rebounded sharply in May, showing a nearly 16% increase from the previous month, driven by a moderating trade war and tariff reductions [5][6] - Despite the rebound, the current sentiment index of 60.5 remains significantly below the pre-pandemic levels and the post-election bump [5][6] Travel Sector Performance - The travel industry, including airlines, hotels, and cruise lines, has faced challenges in 2025, with many companies missing earnings expectations and revising guidance downward [7][8] - The rebound in consumer sentiment is expected to benefit the travel sector, particularly during the summer [6] United Airlines - United Airlines reported strong Q1 earnings, surpassing EPS projections, and is one of the only two airlines to turn a profit in Q1 [9][10] - The company has better net margins and cash flow per share compared to competitors, trading at a forward P/E of 5.1, indicating reasonable valuation [10] Royal Caribbean - Royal Caribbean Cruises reported a net margin of 19.38% in Q1, significantly higher than its competitors, and was the only cruise line to turn a profit [12][13] - The company also pays dividends, currently yielding 1.12%, making it an attractive option in the cruise line sector [13] Booking Holdings - Booking Holdings reported strong Q1 earnings, exceeding expectations and raising guidance, positioning itself as a leader in the online travel reservation space [15] - The company has superior metrics compared to its largest competitor, Expedia, including higher EPS and profit margins [15]

Company Performance - Royal Caribbean's stock increased by 1.72% to $272.39, outperforming the S&P 500's daily loss of 0.22% [1] - The stock has risen by 12.32% over the past month, while the Consumer Discretionary sector experienced a loss of 0.1% [1] Upcoming Earnings Report - The upcoming EPS for Royal Caribbean is projected at $4.04, indicating a 25.86% increase year-over-year [2] - Quarterly revenue is expected to reach $4.54 billion, up 10.44% from the same period last year [2] Annual Estimates - Zacks Consensus Estimates forecast annual earnings of $15.42 per share and revenue of $18.03 billion, reflecting increases of 30.68% and 9.36% respectively from the previous year [3] Analyst Estimates - Recent changes in analyst estimates suggest a positive outlook for Royal Caribbean's business operations and profit generation [4] Zacks Rank and Performance - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently rates Royal Caribbean at 3 (Hold) [6] - Over the last 30 days, the Zacks Consensus EPS estimate has increased by 0.35% [6] Valuation Metrics - Royal Caribbean has a Forward P/E ratio of 17.37, which is lower than the industry average Forward P/E of 19.84 [7] - The company has a PEG ratio of 0.8, compared to the Leisure and Recreation Services industry's average PEG ratio of 1.49 [8] Industry Context - The Leisure and Recreation Services industry, part of the Consumer Discretionary sector, holds a Zacks Industry Rank of 73, placing it in the top 30% of over 250 industries [9]