Controlling over 20% of the global cruise market, Royal Caribbean Cruises Ltd. (RCL) is the largest cruise line company by revenue in the world. The company is the owner of four global cruise vacation brands – Royal Caribbean International, Celebrity Cruises, Silversea, and Azamara. RCL is also a 50% owner of a joint venture that operates TUI Cruises and Hapag-Lloyd Cruises. Together, the brands operate 62 ships with an additional 16 on order. The company currently has…
nearly 20 million members in its loyalty program
Royal Caribbean Cruises Ltd. (RCL) is one of the worst-hit stocks of 2020, as lockdowns resulted in the cancellation of all of the company’s current year sailings. The top-line declined 94% year-over-year in the second quarter to $176 million. Passenger ticket revenues decreased 94.7% to $107 million, compared to $3 billion last year. The company reported a loss of $7.83 per share for the quarter.
However, RCL stock jumped in August after the company announced “remarkable” bookings for its international cruises in 2021, noting that 60% of bookings are for entirely new cruises rather than rescheduled ones from this year.
But with travel restrictions amid the rising coronavirus cases, the company is presently struggling to stay afloat. The quarterly performance and the potential downside based on a number of factors have led our proprietary system to rate RCL as a “Sell.”
Here is how our proprietary POWR Ratings system evaluates RCL:
Trade Grade: F
RCL is currently trading higher than its 50-day moving average of $60.82, but below its 200-day moving average of $68.92, indicating that the stock is neither in an uptrend, nor in a downtrend. In fact, the stock’s 6.5% loss over the past month reflects short-term bearishness.
RCL suspended its global cruise operation in March, voluntarily deferring the sails to at least October 31, which is a month beyond the “No Sail” order from the Centers for Disease Control and Prevention (CDC). RCL issued $1 billion worth priority guaranteed notes and $1.15 billion of convertible notes during the second quarter to keep liquidity in check.
Buy & Hold Grade: F
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade takes into account, RCL is not well positioned. The stock is currently trading 52.4% below its 52-week high of $135.32.
Looking at the past three years, the stock has lost nearly…
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