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Yahoo
08-07-2025
- Business
- Yahoo
How Realistic is Royal Caribbean's 20% EPS CAGR Goal Through 2027?
Royal Caribbean Cruises Ltd. (RCL) has set an ambitious goal to grow adjusted earnings per share (EPS) at a 20% compound annual rate through 2027. The company is relying on a balanced approach that includes moderate capacity growth, yield improvement and cost control. Its Perfecta Performance Program is structured around these priorities and also targets a return on invested capital in the high teens. In the first quarter of 2025, Royal Caribbean's adjusted earnings and revenues increased 53.1% and 7.3%, respectively, year over year. The performance was supported by high close-in demand and higher pricing, with strong onboard spending also contributing. For 2025, the company expects adjusted EPS to grow approximately 28%, with guidance now in the range of $14.55 to $15.55. Management attributes this outlook to better-than-expected first-quarter results, as well as favorable foreign exchange and fuel rates. A solid booking position and steady cost execution also support the company's confidence in meeting its full-year targets. The company continues to follow its proven formula of moderate capacity growth, moderate yield growth and strong cost control. Upcoming ship launches like Star of the Seas and Celebrity Xcel, combined with new destination offerings such as Royal Beach Club Nassau, are expected to enhance pricing power and guest volumes during the second half of the year. These efforts are further supported by improved booking tools, rising digital engagement and operational flexibility across key markets. With consistent demand trends, a stable balance sheet and a focused long-term strategy, RCL appears well positioned to achieve its multi-year EPS growth goal through 2027. Carnival Corporation & plc (CCL) is seeing broad-based strength across its business, driven by sustained demand, higher booking volumes and disciplined cost management. Backed by solid performance, the company raised its fiscal 2025 adjusted EPS guidance to approximately $1.97, indicating a 39% increase from $1.42 in fiscal 2024. Strategic focus on fleet optimization, new ship additions and global marketing efforts continues to support growth as Carnival looks to capture rising international demand. Norwegian Cruise Line Holdings Ltd. (NCLH) is progressing on its fleet transformation and cost-efficiency strategy. For 2025, Norwegian Cruise expects adjusted EPS of $2.05, implying a 13% increase from $1.82 in 2024. New capacity additions like Norwegian Aqua and upgrades to digital tools are enhancing guest experience and supporting upsell opportunities. While Norwegian Cruise operates at a smaller scale, its continued focus on fleet management and disciplined cost control is helping strengthen the earnings outlook. Shares of Royal Caribbean have gained 57% in the past three months compared with the industry's growth of 26.6%. Image Source: Zacks Investment Research From a valuation standpoint, Royal Caribbean trades at a forward price-to-sales ratio of 4.73X, significantly up from the industry's average of 2.45X. Image Source: Zacks Investment Research The Zacks Consensus Estimate for RCL's 2025 and 2026 earnings implies a year-over-year uptick of 30.8% and 14.5%, respectively. The EPS estimates for 2025 have increased in the past 30 days. Image Source: Zacks Investment Research RCL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Carnival Corporation (CCL) : Free Stock Analysis Report Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report Norwegian Cruise Line Holdings Ltd. (NCLH) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
17-06-2025
- Business
- Yahoo
Carnival's Cost Discipline Holds Firm: Will Margin Gains Continue?
Carnival Corporation & plc CCL delivered a strong start to fiscal 2025, highlighting a key theme that investors are increasingly appreciating—disciplined cost control. While robust revenue growth, record bookings, and solid net yield gains have dominated headlines, Carnival's quiet success in managing operating costs has emerged as a fundamental driver of its ongoing margin expansion story. In the first quarter fiscal 2025, adjusted cruise costs per available lower berth day (ALBD) decreased 1.9% year over year to $133.50. Also, adjusted cruise costs excluding fuel per ALBD declined 0.3% year over year to $113.76. The company stated benefits from favorable timing of expenses between quarters, as well as the realization of some permanent cost savings. This cost containment played a key role in helping the company deliver $1.2 billion in EBITDA (up 38% year-over-year), with both operating and EBITDA margins surpassing 2019 levels. The minimal rise in unit costs, combined with robust net yield growth of 7.3%, contributed to a near-doubling of operating income to $543 million compared with $267 million reported in the prior year period. Carnival's focus on cost efficiency continues to bolster its margin profile. With strong forward bookings and limited capacity additions, operational discipline will remain key. If sustained, this strategy could fuel durable profit growth in the years ahead. In fiscal 2025, Carnival projects EBITDA to reach $6.7 billion, reflecting a nearly 10% increase over 2024 levels. Royal Caribbean Cruises Ltd. RCL, a core competitor, is also maintaining tight control over costs. In first quarter of 2025, net cruise costs excluding fuel per Available Passenger Cruise Days (APCD) declined 0.3% year over year to $129.54. The company attributes the outperformance to timing benefits and a continued focus on efficiency under its Perfecta Performance Program. Royal Caribbean's strong onboard spend, pricing traction, and hedged fuel exposure supported its profitability, with EBITDA margins climbing 360 basis points year over year to 35.1%. In 2025, Royal Caribbean expects net cruise costs excluding fuel to range from a 0.1% decline to a 0.9% increase—10 basis points below its prior guidance. The company remains focused on operational efficiency, margin enhancement, and cash flow optimization. While cost performance is assessed on an annual basis, the pace of cost growth is expected to fluctuate across quarters due to factors such as drydock scheduling, new ship deliveries, and the gradual ramp-up of expenses tied to its acquisition of the Costa Maya port and other destination investments. Norwegian Cruise Line Holdings Ltd. NCLH also executed well on the cost side. In the first quarter of 2025, Norwegian Cruise reported gross cruise costs per capacity day of approximately $297, slightly down from $300 in the prior year period. Excluding an $8 impact from higher drydock activity, unit cost growth was limited to just 1%, primarily driven by expenses related to the delivery of Norwegian Aqua. The company noted that the lower-than-expected increase in cruise costs was largely due to the timing of certain expenses that have shifted into the second quarter. As a result, adjusted EBITDA in the first quarter came in at $453 million, surpassing the prior guidance of $435 million. Looking ahead, the management has improved its full-year guidance for adjusted net cruise costs excluding fuel to a range of 0% to 1.25% growth, reinforcing its commitment to sub-inflationary cost increases. Additionally, the company remains confident that its global sourcing strategy and diversified procurement model will help shield operations from potential cost volatility, including tariffs. With a disciplined operating model and transformation office driving ongoing efficiencies, the company is optimistic to preserve margins and navigate macroeconomic uncertainties while delivering long-term growth. Shares of Carnival have gained 11.4% in the past three months compared with the industry's growth of 6.9%. Image Source: Zacks Investment Research From a valuation standpoint, CCL trades at a forward price-to-earnings ratio of 11.21X, significantly below the industry's average of 17.58X. Image Source: Zacks Investment Research The Zacks Consensus Estimate for CCL's fiscal 2025 and 2026 earnings implies a year-over-year uptick of 31.7% and 13.1%, respectively. The EPS estimates for fiscal 2025 and 2026 have increased in the past 30 days. Image Source: Zacks Investment Research CCL stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Carnival Corporation (CCL) : Free Stock Analysis Report Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report Norwegian Cruise Line Holdings Ltd. (NCLH) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
