Royal Caribbean drops as weak Q3 outlook overshadows strong Q2 results
The cruise-line operator continues to benefit from strong bookings even as competition heats up.
Shares of Royal Caribbean fell 6% in premarket trading Tuesday after the cruise giant’s strong Q2 results and improved full-year guidance weren’t enough to wow investors following the stock’s 53% gain so far this year, because its near-term outlook isn’t nearly as impressive.
Adjusted earnings per share came in at $4.38, well above the $4.09 expected by analysts polled by FactSet and blowing away the high end of the company’s guidance for $4.00 to $4.10. Revenue came in at $4.53 billion, falling just an inch shy of Wall Street’s estimates of $4.55 billion.
Royal Caribbean also raised its full-year 2025 adjusted EPS guidance to a range of $15.41 to $15.55, lifting the low end from its prior forecast of $14.55, thanks to these strong Q2 results. The midpoint of this range is above the $15.45 figure penciled in by analysts.
But there’s a catch: while upgrading its outlook thanks to strong operational performance in the first half of the year, management also signaled that the start of the second half wouldn’t deliver the same kind of knockout results. For the third quarter, management said adjusted EPS would range between $5.55 to $5.65, while the consensus is looking for $5.84. Royal Caribbean said the fact that cost growth was under control so much in Q2, flattering those results, was “driven entirely by shifting of timing of operating expenses into the second half of the year.”
Royal Caribbean and rivals like Carnival have seen blowout quarters this year, fueled by huge booking demand, even as ticket prices climb. An estimated 19 million Americans are expected to take a cruise this year, marking the third straight year of record passenger volume.
It hasn’t been all smooth sailing. Back in April, Royal Caribbean was hit with a pair of price target cuts as some analysts flagged market uncertainty and questioned how long the demand boom could last.
