Royal Caribbean to Report Q2 Earnings: Buy, Sell or Hold the Stock?

Core Insights - Royal Caribbean Cruises Ltd. (RCL) is set to release its second-quarter 2025 results on July 29, with an expected earnings per share (EPS) of $4.10, reflecting a 27.7% increase from $3.21 in the same quarter last year [1][5] - The consensus estimate for second-quarter revenues is $4.55 billion, indicating a 10.7% growth year-over-year [5] Earnings Estimates - The Zacks Consensus Estimate for RCL's EPS has increased by 1.5% over the past 60 days [1] - The earnings surprise history shows that RCL has outperformed the Zacks Consensus Estimate in the last four quarters, with an average surprise of 8.7% [5][7] Revenue and Growth Factors - Continued strength in close-in demand, strong pricing across key itineraries, and growing onboard revenue contributions are expected to support RCL's second-quarter performance [11] - The introduction of new vessels like Icon of the Seas and Utopia of the Seas is anticipated to positively impact yields, with expected yield growth of 4.3% to 4.8% year-over-year [13] - Passenger ticket revenues are projected to rise 11.1% year-over-year to $3.2 billion, while onboard and other revenues are expected to increase by 6.9% to $1.3 billion [14] Margin Expectations - Operating margins are predicted to expand by 150 basis points year-over-year to 28.2%, supported by scale efficiencies and effective cost management [15] - Net cruise costs excluding fuel are expected to rise by 3.7% to 4.2% year-over-year due to dry dock activity and new ship ramp-up costs [16] Stock Performance and Valuation - RCL shares have increased by 61.5% over the past three months, outperforming the Zacks Leisure and Recreation Services industry, which rose by 29.7% [18] - The stock is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 20.76X, above the industry average of 20.20X [21] Strategic Focus - RCL aims to capture a larger share of the $2 trillion global vacation market through strategic fleet expansion and premium onboard offerings [23] - The company’s diversified deployment strategy, particularly in high-demand regions like the Caribbean, is expected to support continued yield growth [23]