Royal Caribbean Gears Up to Report Q3 Earnings: What's in Store?

Royal Caribbean Cruises Ltd. RCL is scheduled to report third-quarter 2025 results on Oct. 28, before the opening bell.

RCL’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise being 6.4%.

Trend in the Estimate Revision of RCL

The Zacks Consensus Estimate for third-quarter earnings per share (EPS) is pegged at $5.67, indicating a rise of 9% from $5.20 reported in the year-ago quarter.

Royal Caribbean Cruises Ltd. Price and EPS Surprise

Royal Caribbean Cruises Ltd. price-eps-surprise | Royal Caribbean Cruises Ltd. Quote

For revenues, the consensus mark is pegged at nearly $5.16 billion. The metric suggests a rise of 5.7% from the year-ago quarter’s figure.

Let’s take a look at how things have shaped up in the quarter.

Factors Likely to Shape Royal Caribbean's Q3 Quarterly Results

Royal Caribbean’s third-quarter top line is expected to have increased year over year, driven by resilient consumer demand, strong pricing trends and continued strength across onboard revenue streams. Robust booking activity, particularly for close-in sailings and steady load factors, likely supported revenue growth in the to-be-reported quarter.

Management anticipates net yield growth of 2-2.5%, likely fueled by like-for-like performance from the existing fleet and solid contributions across Caribbean, European and Alaskan itineraries. Healthy pre-cruise purchases, along with increased spending from loyalty members, are expected to have bolstered third-quarter onboard revenue momentum.

Our model estimates third-quarter passenger ticket revenues to rise 5.1% year over year to $3.6 billion. We expect onboard and other revenues to rise 6.3% year over year to $1.5 billion.

Meanwhile, strong performance at private destinations, including Perfect Day at CocoCay, and progress toward the launch of the Royal Beach Club Paradise Island, may have enhanced yields. Our model predicts third-quarter net yields at $301.3 million (on a reported basis) and $300.8 million (constant-currency basis).

Elevated costs tied to new ship deliveries and deferred spending are likely to have weighed on margins in the third quarter. Management expects net cruise costs (excluding fuel) to have increased 6-6.5% year over year, with roughly 230 basis points of the rise attributable to the delivery of Star of the Seas and cost timing shifts from the previous quarter. Per our model, third-quarter net cruise costs (excluding fuel per APCD) are estimated at $126.2 million (on a reported basis) and $125.7 million (on a constant-currency basis).

Despite these headwinds, solid yield growth and sustained onboard revenue strength likely offset most of the cost pressures in the third quarter. The company projects third-quarter adjusted EPS in the range of $5.55-$5.65, reflecting continued earnings momentum and strong execution across its global portfolio.

What Our Model Says About RCL Stock

Our proven model predicts an earnings beat for Royal Caribbean this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is exactly the case here.

Royal Caribbean’s Earnings ESP: RCL has an Earnings ESP of +1.54%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

RCL’s Zacks Rank: The company currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Poised to Beat on Earnings

Here are some other stocks from the Zacks Consumer Discretionary sector that investors may consider, as our model shows that these, too, have the right combination of elements to post an earnings beat.

Norwegian Cruise Line Holdings Ltd. NCLH has an Earnings ESP of +0.80% and a Zacks Rank of 1 at present.

Norwegian Cruise Line is expected to register a 18.20% increase in earnings for the to-be-reported quarter. Norwegian Cruise Line reported better-than-expected earnings in two of the trailing four quarters and missed on two occasions, the average surprise being 29.1%.
 
Wynn Resorts, Limited WYNN has an Earnings ESP of +9.24% and a Zacks Rank #2 at present.
 
Wynn Resorts’ earnings for the to-be-reported quarter are expected to increase 20%. Wynn Resorts reported better-than-expected earnings in one of the trailing four quarters and missed on three occasions, the average surprise being 11.5%.
 
PENN Entertainment, Inc. PENN currently has an Earnings ESP of +13.00% and a Zacks Rank of 3.

PENN Entertainment’s earnings for the to-be-reported quarter are expected to increase 58.3%. PENN reported better-than-expected earnings in three of the trailing four quarters and missed on one occasion, the average surprise being 92.7%.

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This article originally published on Zacks Investment Research (zacks.com).

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