Royal Caribbean cruising along

Ideal circumstance has given Royal Caribbean the perfect conditions to steam ahead.           

Royal Caribbean logo
Source: Bloomberg

Over the last month Royal Caribbean Cruises Ltd has seen its shares jostle at the top of the biggest climbers list for the S&P 500. At the time of writing, the shares are now up over 15% in the last month. At the moment, the firm operates a fleet of 41 ships covering seven different continents and 455 destinations, and has invested interests for both CDF, covering the French market, and TUI Cruises covering the German markets. 

The company’s fourth-quarter figure, not due until January, is expected to see sales drop from $2.389 billion down to $1.885 billion and pre-tax profits fall from $490 million down to $97 million. It is worth noting that the recent moves in energy prices, specifically oil, have not been factored in. As oil, the company’s largest cost, has now fallen by almost 40% in the last three months and even more over the last six, there will be lagging benefits and substantially improved profit margins yet to be fully factored into the company.

Shares in the company from the beginning of the year have risen by 67% and in the last month have become heavily overbought. The divergence away from the 200-day moving average does make this look a little overdone but the fundamental improvements for the company’s cost base certainly warrant optimism. 

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts