In its recent Q 1 earnings call, Royal Caribbean Cruises (RCL) executives provided earnings guidance for the year from $2.85 to $3.00 per share, compared to the $3 .20 to $3 .40 guidance given in its Q1 earnings call in January, and from $0.40 to $0.45 for Q2.
According to RCL, pricing is up for Q2, Q3 and Q4 of this year, and both bookings and pricing are running ahead for Q 1 2009 on a year-over year basis. CFO and Executive Vice President Brian Rice said on the earnings call that he expects to see yield improvement in all four quarters and that guests continue to spend at or above last year's levels.
Wall Street remains jittery, however, in light of the faltering American economy and higher fuel prices affecting Europe as well, and RCL shares were trading below $32 at press time, compared to a 52-week low/high of$30. l l/$45.17. The average 12-month price target has also been reduced to $41.67 from $45 to $50 a year ago.
For the first quarter ended March 31, 2008, RCL posted net income of $75.6 million, or $0.35 per share, on revenues of $1.4 billion, compared to net income of $8.8 million, or $0.04 per share, on revenues of $1.2 billion for the first quarter last year.
Richard Fain, RCL chairman and CEO commented that he was gratified by the performance of all the brands, but frustrated by the direct and indirect costs related to fuel. But despite the economic slowdown, people are still taking vacations, he said, noting that the industry "is resistant, if not immune to economic slowdowns."
Fain also noted the upside potential, saying he believed the cruise lines are undervalued for what they deliver.