The travel industry had a major setback last year as leisure and business travel practically came to a halt and most hotels closed. But as the COVID-19 vaccines developed by companies such as Pfizer Inc. (PFE) and Moderna, Inc. (MRNA) received Emergency Use Authorization (EUA) from the FDA, it was expected that the travel industry’s prospects would soon improve. However, despite more than 50% of American adults now fully vaccinated, the travel industry has yet to see sufficient demand to return to profitability…
The key reason behind consumers’ avoidance of international travel is that several parts of the world are experiencing a resurgence of COVID-19 cases. Also, the vaccine hesitancy of many Americans is creating a challenge for people that may want to travel domestically. Furthermore, several tourist destinations and travel-related companies have increased their charges to stay solvent amid the difficult market situation. The increased charges are hardly an inducement to lure more travelers.
Given this backdrop, we think travel-related companies Royal Caribbean Group (RCL – Get Rating), Hyatt Hotels Corporation (H – Get Rating), and Hawaiian Holdings, Inc. (HA – Get Rating) are unfavorably positioned going into the summer because of their weak financials. So, we think it’s wise to avoid their shares now.
RCL is a cruise company that operates through three global cruise vacation brands: Royal Caribbean International, Celebrity Cruises, and Silversea Cruises. It offers a range of travel destinations, including Alaska, Asia, Bermuda, Canada, the Caribbean, and Europe, with cruise lengths ranging from two to 24 nights.
On May 22, RCL announced its plans to launch its Alaska season with seven-night cruises—roundtrip from Seattle—on returning favorites Serenade and Ovation of the Seas, beginning July 19 and August 13, respectively. However, because the economy has not yet fully recovered from the COVID-19 pandemic, it’s uncertain how many consumers will be willing to take advantage of the company’s initiative.
RCL’s revenue for the first quarter, ended March 31, 2021 was $42.01 million, which represents a 97.9% decrease from the prior-year quarter. The company’s net loss was $1.13 billion compared to a $1.44 billion loss in the prior-year period. It’s loss per share came in at $4.66 compared to a $6.91 loss in the year-ago period.
RCL’s revenue is expected to decrease 2,215.9% year-over-year to $712.82 million for the quarter ending September 30, 2021. And analysts expect RCL’s EPS to remain negative in its fiscal year 2021. The stock has gained only 5.4% over the past three months to close yesterday’s trading session at $96.25.
RCL’s poor prospects are apparent in its POWR Ratings also. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an overall F rating, which equates to Strong Sell in our proprietary rating system. It has an F grade for Value and Quality, and a D grade for Sentiment, Stability and Growth. Click here to see the additional POWR rating for RCL (Momentum).
RCL is ranked #2 of 4 stocks in the F-rated Travel-Cruises industry.
One of the established players in the hospitality space, H operates through four segments: Owned and Leased Hotels, Americas Management and Franchising, ASPAC Management and Franchising, and EAME/SW Asia Management and Franchising. It operates its properties under several brands, including the Park Hyatt, Miraval, Grand Hyatt, and Hyatt Regency.
The company announced on March 31, 2021 that it plans to grow its brand footprint in India by more than 70% by 2023. However, with the resurgence of…
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