Buoyed by a strong profit outlook for 2026, record bookings for the year, and expansion plans that include new ships, new destinations, and new European itineraries, shares of Royal Caribbean (RCL) were launched 15% higher on Thursday to their highest level in four months.
The revenue growth, however, was just half the story as Royal Caribbean (RCL) successfully controlled costs and navigated the saturated Caribbean market.
“Another year of flat to +1% of net cruise cost ex-fuel is decidedly better than expectations of UBS’s +2.0% estimate,” UBS analyst Robin Farley writes, with the cost profile also contributing to the full year EPS outlook of $17.70 to $18.10 per share.
Besides financials, Royal Caribbean’s fleet expansion is contributing to the stock’s performance with the upcoming addition of 10 new ships for its Celebrity River business, along with two new ocean ships.
“With this announcement, RCL grows into the highly fragmented European river market, with announced additional sailings on the Danube and the Rhine,” noted BofA Securities’ Andrew Didora.
The pressure from Caribbean oversaturation should be felt more acutely in the first quarter. But RCL’s yield growth guidance of 1.0% to 1.5% is “good enough and suggests RCL can still grow total pricing despite these headwinds,” says BNP Paribas analyst Xian Siew, adding that once the company is past some of the Caribbean headwinds, “pricing can reaccelerate with a path to 3%+.”
“With RCL’s growth story still intact and better-than-expected cost controls driving upside on full year EPS guidance, we think this should be a green light to cruise and remain Outperform,” Siew adds.
Royal Caribbean’s (RCL) upbeat outlook and outsized gain in the share price is lifting the segment, with shares of Carnival Corp (CCL), Norwegian Cruise Lines (NCLH), and Viking Holdings (VIK) all trading with gains of 5% to 8%.