Why Is Royal Caribbean (RCL) Down 5.1% Since Last Earnings Report?

Core Viewpoint - Royal Caribbean reported mixed Q3 2025 results, with adjusted earnings exceeding estimates while revenues fell short, indicating a complex financial landscape for the company [2][3]. Financial Performance - Adjusted earnings per share (EPS) for Q3 2025 were $5.75, surpassing the Zacks Consensus Estimate of $5.68, and up from $5.20 in the prior-year quarter [3]. - Quarterly revenues reached $5.14 billion, missing the consensus estimate of $5.17 billion but reflecting a 5.2% year-over-year increase from $4.88 billion [3]. Revenue Breakdown - Passenger ticket revenues amounted to $3.64 billion, an increase from $3.47 billion in the prior-year quarter, slightly below the estimate of $3.65 billion [4]. - Onboard and other revenues rose to $1.5 billion from $1.41 billion year-over-year, aligning with the estimate [4]. Cost and Yield Analysis - Total cruise operating expenses were $2.48 billion, a 3.7% increase year-over-year, exceeding the estimate of $2.35 billion [5]. - Net yields increased by 2.4% on a constant currency basis and 2.8% on a reported basis compared to Q3 2024 [5]. Financial Position - As of September 30, 2025, cash and cash equivalents stood at $432 million, up from $388 million at the end of 2024 [6]. - Long-term debt decreased to $17.2 billion from $18.47 billion at the end of 2024, while the current portion of long-term debt rose to $3 billion from $1.6 billion [6]. Booking Trends - Royal Caribbean is experiencing strong booking momentum, with load factors for 2025 and 2026 at record levels, driven by robust demand for close-in sailings [7]. - Bookings for 2026 are significantly above prior-year levels, indicating strong rate growth [7]. Future Outlook - For Q4 2025, the company anticipates depreciation and amortization expenses between $445-$455 million and net interest expenses between $245 million and $255 million [10]. - Adjusted EPS for Q4 is projected to be in the range of $2.74-$2.79 [10]. - For 2025, adjusted EPS is expected to be between $15.58 and $15.63, an increase from previous expectations [12]. Estimate Trends - Recent trends indicate a downward revision in estimates for the stock, suggesting a cautious outlook [13][15].