Royal Caribbean Cruises Ltd. (RCL), Carnival Corporation (CCL): This Cruise Stock Is Still Afloat and Might Get Better

Page 1 of 2

Royal Caribbean Cruises Ltd. (NYSE:RCL) might have experienced trouble on the high seas last week, but that has not stopped the leisure company from announcing its plans to construct a third quantum ship. This new mega-ship will have more high-priced state rooms and some of the best energy efficiency in the open ocean. But should Royal Caribbean Cruises Ltd. (NYSE:RCL) plan such large investments on the heels of its recent misfortune?

Royal Caribbean Cruises Ltd. (NYSE:RCL)

Fire on the water

Before the fire aboard Grandeur of the Seas, all negative cruise attention was focused on Carnival Corporation (NYSE:CCL). The extensive technical problems have led to price reductions, hurting Carnival Corporation (NYSE:CCL)’s margins. Carnival Corporation (NYSE:CCL) reduced its earnings per share estimate by $0.35 to $1.95, and its share price has dropped from $39 in February to around $32. In its most recent quarter, Carnival Corporation (NYSE:CCL) had a revenue growth of only 0.30% and saw net income decline.

It is clear that its operational problems have had a severe negative impact on the stock price. It has also drawn negative press for the industry as a whole. Carnival Corporation (NYSE:CCL) was the kid with lice on the playground that everyone wanted to stay away from. But since Royal Caribbean Cruises Ltd. (NYSE:RCL) has had an incident, it’s now apparent that bad things can happen regardless of the cruise line. The fire is expected to cost Royal Caribbean Cruises Ltd. (NYSE:RCL) $0.10 per share.

While this is no doubt a hit to Royal Caribbean Cruises Ltd. (NYSE:RCL)’s credibility, it also gives it an opportunity to show how well it can handle a crisis. When the fire broke out, the systems designed to keep the fire from spreading worked and the ship was able to dock safely in the Bahamas. Royal Caribbean executives were waiting for the troubled passengers at the port to offer apologies. All passengers received a full refund, transportation to Baltimore, and a voucher good for a future cruise. Overall, I think this shows how well Royal Caribbean can handle a sticky situation. The earnings drop will hurt, but I think consumers will eventually return to the cruise liner.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!