Royal Caribbean Cruises Ltd. - Momentum - Zacks Rank Buy

Royal Caribbean Cruises Ltd. (RCL) recently hit a new 52-week high as the company's earnings rebounds on a resurgent global economy and a commitment to cutting costs.

Company Description

Royal Caribbean Cruises Ltd. operates in the cruise vacation industry in North America and Internationally. The company was founded in 1968 and has a market cap of $7.2 billion.

Fourth-Quarter Results

Royal Caribbean pleased its shareholders on Jan 28 with Q4 results that came in ahead of expectations. Revenue was even from last year at $1.5 billion, but earnings came in better than expected at 2 cents, 8 cents ahead of the Zacks Consensus Estimate calling for a loss of 6 cents.

The company noted that its results were driven by stronger customer demand than expected and attention to containing costs, with Net Cruise Costs down 10.5% from last year. Royal Caribbean CFO Brian Rice commented on the rebounding global economy's effect on the company, saying that, "Since we lapped the beginning of the recession back in September, we are experiencing clear signs of recovery in the order books,."

Estimates Rising

The analysts are on board too, boosting the current-year estimate 38 cents in the last month to $1.81. The next-year estimate is up 43 cents in the same time to $2.43, a 34% growth projection.

Valuation

In spite of the gains, and related to rising estimates, this stock looks reasonably priced, with a forward P/E multiple of 18X, a slight premium to the overall market with the nice earnings projection in tow.

The Chart

Shares of RCL recently jumped above some short-term resistance to hit new 2-year high at $33.93. If shares pull back look for support from the breakout area and the trend line higher. Take a look below.

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