Results: Royal Caribbean Cruises Ltd. Exceeded Expectations And The Consensus Has Updated Its Estimates

It's been a pretty great week for Royal Caribbean Cruises Ltd. (NYSE:RCL) shareholders, with its shares surging 14% to US$322 in the week since its latest second-quarter results. The result was positive overall - although revenues of US$4.8b were in line with what the analysts predicted, Royal Caribbean Cruises surprised by delivering a statutory profit of US$4.20 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Taking into account the latest results, the current consensus from Royal Caribbean Cruises' 26 analysts is for revenues of US$19.6b in 2026. This would reflect a modest 4.7% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 7.1% to US$17.62. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$19.6b and earnings per share (EPS) of US$17.14 in 2026. So the consensus seems to have become somewhat more optimistic on Royal Caribbean Cruises' earnings potential following these results.

See our latest analysis for Royal Caribbean Cruises

The consensus price target was unchanged at US$348, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Royal Caribbean Cruises, with the most bullish analyst valuing it at US$425 and the most bearish at US$262 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Royal Caribbean Cruises' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Royal Caribbean Cruises' revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 9.6% growth on an annualised basis. This is compared to a historical growth rate of 34% over the past five years. Compare this to the 158 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 9.1% per year. Factoring in the forecast slowdown in growth, it looks like Royal Caribbean Cruises is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Royal Caribbean Cruises following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$348, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Royal Caribbean Cruises going out to 2028, and you can see them free on our platform here.

Even so, be aware that Royal Caribbean Cruises is showing 2 warning signs in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.