Investors Heavily Search Royal Caribbean Cruises Ltd. (RCL): Here is What You Need to Know

Royal Caribbean (RCL) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.Shares of this cruise operator have returned +13.2% over the past month versus the Zacks S&P 500 composite's +2.7% change. The Zacks Leisure and Recreation Services industry, to which Royal Caribbean belongs, has gained 8.4% over this period. Now the key question is: Where could the stock be headed in the near term?Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.Revisions to Earnings EstimatesHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.For the current quarter, Royal Caribbean is expected to post earnings of $5.04 per share, indicating a change of +30.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -5.5% over the last 30 days.For the current fiscal year, the consensus earnings estimate of $11.61 points to a change of +71.5% from the prior year. Over the last 30 days, this estimate has changed -0.4%.For the next fiscal year, the consensus earnings estimate of $13.55 indicates a change of +16.7% from what Royal Caribbean is expected to report a year ago. Over the past month, the estimate has changed +1.3%.Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Royal Caribbean is rated Zacks Rank #2 (Buy).The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:12 Month EPSProjected Revenue GrowthWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.For Royal Caribbean, the consensus sales estimate for the current quarter of $4.86 billion indicates a year-over-year change of +16.8%. For the current and next fiscal years, $16.43 billion and $17.89 billion estimates indicate +18.2% and +8.9% changes, respectively.Last Reported Results and Surprise HistoryRoyal Caribbean reported revenues of $4.11 billion in the last reported quarter, representing a year-over-year change of +16.7%. EPS of $3.21 for the same period compares with $1.82 a year ago.Compared to the Zacks Consensus Estimate of $4.01 billion, the reported revenues represent a surprise of +2.58%. The EPS surprise was +15.88%.The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates three times over this period.ValuationWithout considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.Royal Caribbean is graded B on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Royal Caribbean. However, its Zacks Rank #2 does suggest that it may outperform the broader market in the near term.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Royal Caribbean Cruises Ltd. (RCL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks