Royal Caribbean Cruises Earnings News: Can RCL stock sail away from bears?

Royal Caribbean (RCL) is sailing into choppy waters after the release of Q1 earnings. The cruise operator missed on both top and bottom lines and RCL stock is trading 2% lower on Thursday in the premarket.

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Royal Caribbean (RCL) stock news: Full fleet expected by summer 2022

Royal Caribbean reported Q1 earnings per share (EPS) of $-4.57 when Wall Street was looking for $-4.47. Revenue also missed coming in at $1.06 billion versus the $1.15 billion estimate. So far, we do not have much color on the earnings as the conference call is not due to get underway until 14 GMT (10 am EST). The link for the conference call can be found here. 

Royal Caribbean did say that bookings for 2022 have surpassed the record levels seen in 2019. RCL expects by the summer of 2022 to be back to a full fleet of sailings and full schedule as before the pandemic. RCL said it expects to return to profitability in the second half of 2022. Royal Caribbean has hedged 55% of fuel costs for 2022 and 25% for 2023. 

Royal Caribbean (RCL) stock forecast: Rising debt caps bullish action

The problem for RCL stock is twofold, and both factors are outside its control. Firstly, it has a lot of debt that will need refinancing. Higher interest rates mean higher costs. Secondly, fuel costs as alluded to above. 25% hedged for 2023 is not comforting.

In rising yield environments, debt loads weigh on balance sheets and cash flow. Rising inflation hits consumer demand at the top end of the market and cruising is the top end. Pent-up demand will likely see RCL through this year but next summer 2023 expect demand to be hit as consumers pull back.

There is nothing too significant in terms of the RCL stock chart. Choppy is a bit of an obvious pun but applicable. 

RCL stock chart, daily