Royal Caribbean shares tank on outlook

New York-listed cruiseship owner sees shares slump 14% after profit predictions miss analyst expectations.

Royal Caribbean snapshot

Royal Caribbean Cruises is the world's second-largest cruiseship owner.

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Royal Caribbean Cruises saw its shares plunge Tuesday morning after the company revealed profit guidance that was below expectations.

In mid-morning trading, the Miami cruiseship giant’s shares dropped 14% to $72.71 on the New York Stock Exchange, slashing $2.6bn from its market capitalisation.

Earlier this morning, Royal Caribbean reported fourth-quarter earnings that were slightly better than analyst expectations, but its guidance for 2016 was lower than Wall Street had been predicted.

The company, which is the world’s second-largest cruiseship owner, said it expects to book $5.90 to $6.10 in earnings per share (EPS) this year.

The average analyst prediction before the earnings report called for EPS of $6.20, according to UBS analyst Robin Farley.

 Royal CaribbeanAnalyst estimate
Fourth-quarter EPS$0.94$0.92
Fourth-quarter yield growth4.9%5.1%
2016 EPS$5.90-$6.10$6.26
2016 yield growth3%2-4%

Source: UBS

She said the miss appeared to be a result of a mix of higher interest and depreciation, and potentially fuel costs.

As TradeWinds reported earlier today, Royal Caribbean reported adjusted net income of $1.07bn for 2015, which exceeded the company’s own guidance. The result compared with adjusted profit of $756m in 2014.

Quarterly net income of $207m amounted to EPS of $0.94, which was slightly higher than the average analyst bet of $0.92.

Royal Caribbean predicted yield growth of 2% to 4%, which Farley said was in line with expectations.

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