Are cruise lines losing money?
The latest forecasts from S&P Global Market Intelligence show all three major cruise lines losing money until at least Q3 2022 and Q4 being rather hit or miss.
With lockdowns and travel restrictions in place, cruise companies had no ability to operate and generate cash flow, leading to aggressive debt and equity financing. As a result, Norwegian Cruise Line is going to have a difficult time mounting a meaningful post-pandemic recovery.
Despite being one of the hardest-hit industries by the pandemic, cruise line stocks could be poised to rebound. Recovery thus far has been uneven, however, and some of the cruise industry's early gains have been lost as the omicron variant tempers the cruise lines' ability to meet demand.
Royal Caribbean Group today reported first quarter 2022 operating loss of $(1.2) billion and loss per share of $(4.58). The group said it continues to make strides in its healthy return to operations in a strong demand environment.
Shares of cruise line stocks had a rough start to the week after a Wall Street analyst downgraded expectations because of the risk of a recession. Shares are trading lower for all of the major cruise lines despite the stock market rising slightly in morning trading.
Cruise line industry trends
Revenue for each of the three largest cruise lines declined by between 73% and 80% in 2020. Although the cruise industry's annual revenue almost doubled in 2021 (from $3.36 billion to $6.65 billion), it's still far from the $27.5 billion reported in 2019.
Inflation may do to Carnival Cruise Lines (NYSE:CCL) what the pandemic could not, force the world's biggest cruise line into bankruptcy. That would be sad because in some ways things are picking up. Carnival is expected to report $2.81 billion in revenue for the quarter ending in May, when it next reports June 27.
Pre-pandemic, the cruise sector contributed $154 billion to the global economy, according to CLIA -- that number dipped nearly 60%, to $63.4 billion for 2020, and led to the loss of half of cruise-supported jobs around the world (totaling 576,000).
Norwegian Cruise Line has improved its financial position even though it has taken on more than $12 billion worth of debt to survive, including an additional $2.1 billion in debt transactions conducted just this month.
CCL's stock price did rise by +12% post-results release on June 24, 2022, due to the strong growth in bookings and occupancy for the recent quarter. But Carnival stock isn't a Buy despite the year-to-date stock price correction and better-than-expected Q2 FY 2022 operating metrics.
Is Royal Caribbean doing well?
In February 2020 (the last quarter before Covid-19), Royal Caribbean Group reported 2019 was another year of very strong performance that generated over $2 billion in adjusted net income. In 2019, Royal Caribbean Group generated $3.09 billion in onboard revenues, which was up from $2.7 billion for the year in 2018.
Shares of Royal Caribbean have underperformed the broader market over the past year. The stock briefly outperformed from late May 2021 to mid-June 2021, but has mostly underperformed ever since. Royal Caribbean's shares have provided a total return of -11.7%, below the S&P 500's total return of -0.9% as of May 3, 2022.
In fact, ships sailing at full capacity has already happened on select sailings, "we have ships now sailing at 100% and we've had ships sailing at 100% now for several weeks out of the Caribbean, into the Caribbean market and a short product."
Carnival Co. & has received a consensus rating of Hold. The company's average rating score is 2.06, and is based on 5 buy ratings, 8 hold ratings, and 4 sell ratings.
Stock Price Forecast
The 19 analysts offering 12-month price forecasts for Carnival Corp have a median target of 11.51, with a high estimate of 29.00 and a low estimate of 7.00. The median estimate represents a +27.33% increase from the last price of 9.04.
CCL has a D grade for Quality, consistent with its negative trailing-12-month EBITDA margin, compared to the 12.11% industry average. It has an F grade for Stability, in sync with its 2.04 beta. CCL is ranked #2 out of 4 stocks in the F-rated Travel – Cruises industry.
Crew Shortages Hit the Entire Cruise Industry
This has largely been due to visa issues slowing down the ability to get crew members onboard. That's a problem the Carnival President Christine Duffy has been working with U.S. authorities to solve the staffing problems, according to a report from Cruisehive.
Based on the latest financial disclosure, Royal Caribbean Cruises has a Probability Of Bankruptcy of 55%. This is 32.88% higher than that of the Consumer Cyclical sector and significantly higher than that of the Travel Services industry.
Obviously, with the existing $3.1 billion, the company can meet its principal payments on debt maturing in 2022. All that implies the company's debt is manageable right now. We can also say that Norwegian Cruise Line's debt is a direct result of the pandemic.
People should avoid cruise travel regardless of their vaccination status, the CDC says. The agency says it will continue to provide guidance to the cruise ship industry in order for cruise lines to operate in a way that will provide "safer and healthier" environments for crews, passengers and communities.
Will cruise lines Recover in 2022?
In addition, more than 75 percent of oceangoing capacity is already back in service—and nearly 100 percent is expected back in operation by August 2022. Best of all, travel advisors and passengers will likely see a full cruise industry recovery in 2023.
RCI-Royal Caribbean cruise ships to be back to full capacity by summer 2022. The cruise shipping industry is slowly moving back towards normal numbers by getting more ships back into service and more guests onboard. Full capacity is expected to return this summer.
According to the WTTC report, cruise companies can expect to surpass not only early-2020 revenues, but the revenues from its best year ever -- 2019 -- as soon as next year. By 2026, cruise stocks could be putting up numbers that "beat" their 2019 performance "by 12 to 28%," reports CruiseHive.com.
Norwegian was forced to incur billions of dollars of debt during the early stages of the pandemic, when its ships were unable to sail due to coronavirus-related safety measures.
Norwegian Cruise Line Holdings (NYSE:NCLH) has underperformed in 2021, and that could hold true for 2022 as well. Higher debt levels, dilution, and ongoing COVID issues on cruise ships pose headwinds, although an eventual business recovery is likely.
In the note put out Wednesday morning, a Morgan Stanley analyst cited weak sales, growing economic risks, and the rising cost of interest on debt as the three biggest risks to Carnival -- and slashed their price target on the company's shares by 23.5%.
Carnival and the cruise industry were among the hardest hit by the pandemic but are now recovering. Carnival is now operating at 91% of capacity, and booking volumes in the second quarter for future cruises were nearly double those achieved in the first quarter.
The all-time high Carnival stock closing price was 71.94 on January 29, 2018.
To survive the pandemic, Royal Caribbean more doubled its long-term debt load to about $20 billion.
...
Royal Caribbean Stock Investors are Still Waiting for the Tide to Come in.
| TICKER | COMPANY | PRICE |
|---|---|---|
| RCL | Royal Caribbean Cruises Ltd. | $37.03 |
How much does Royal Caribbean make per cruise?
After subtracting overhead costs, a ship will make out with roughly $291 in net profit per passenger, per cruise. That means that at full capacity, a single ship like Royal Caribbean's Symphony of the Seas might make $9.8m in revenue ($1.7m of which is profit) during one 7-day excursion.
Cruises do have tons of expenses; however, they still make a little profit per ticket that adds up quickly when they have a full ship. Each ticket sale goes toward most of the expenses, leaving a small profit behind per ticket, meaning onboard sales are where the cruise lines truly make a profit.
Carnival Cruise Line blames the staffing shortage, in part, on slow visa processing. Cruise ship jobs, though, are infamous for coming with long hours, less-than-princely pay, and the requirement of living far from loved ones.
That ship can hold 4,375 passengers at full capacity, according to Ship Technology and on that July sailing, it felt empty and crew seemed to outnumber passengers.
Passengers must wear masks during the entire embarkation and debarkation process, while indoors during any Carnival-approved shore excursions and while on any transportation vehicles, including tenders. Masks may also be required when ashore, per local guidelines.
Cruise Shareholder Benefits - Instructions to Obtain Credits
Cruise travelers owning 100 shares in Carnival, Royal Caribbean, or Norwegian can receive up to $250 in onboard credits. Additional benefits of using CruiseCompete range from personalized offers with cabin upgrades, cabin credits and more valuable amenities.
If you buy in at a particularly low-cost time, you can get 100 stocks in Carnival Corp. for less than $2,000. When prices are closer to the average, you may be investing $4,000 to $5,000, and when prices are particularly high, the price of 100 stocks could be over $6,000.
Carnival Cruise Line is proud to be part of a family of companies owned by Carnival Corporation, which includes sister lines Princess Cruises, Holland America Line and Cunard Line, among others.
Carnival Corporation
Shareholder Benefit Offer: $250 Onboard Credit per Stateroom on Sailings of 14 days or longer. $100 Onboard Credit per Stateroom on Sailings of 7-13 days. $50 Onboard Credit per Stateroom on Sailings of 6 days or less.
A halt in dividend payments: Carnival has also stopped paying dividends to its shareholders in 2020 and 2021 and does not plan to pay dividends in 2022, which may deter some investors from buying the stock.
Should I buy CBRL stock?
Out of 6 analysts, 1 (16.67%) are recommending CBRL as a Strong Buy, 0 (0%) are recommending CBRL as a Buy, 4 (66.67%) are recommending CBRL as a Hold, 0 (0%) are recommending CBRL as a Sell, and 1 (16.67%) are recommending CBRL as a Strong Sell.
Has Carnival Corporation ever had a stock split? Yes. On December 14, 1994, Carnival Corporation distributed a two-for-one stock split of its common stock. The stock that day closed at a price of $20.50 adjusted for the split (on a pre-split basis, the price would have been $41.00).
Obviously, with the existing $3.1 billion, the company can meet its principal payments on debt maturing in 2022. All that implies the company's debt is manageable right now. We can also say that Norwegian Cruise Line's debt is a direct result of the pandemic.
Viking Cruises Founder Loses 66% Of Wealth As Pandemic Hits Norway's Richest. Is It Better To Lease Or Buy A Car In Summer 2022?
The company has suspended all payments to financial creditors and in a statement said that the remaining available cash will be used to maintain critical services for its operations, while negotiating a restructuring. The company's outstanding financial indebtedness was US $3.37 billion as of July 31st, 2020.
Carnival is the weakest of the three big cruise lines because it piled on debt buying new ships when times were good. Its size forced it to buy more debt to stay alive in 2020. It ended fiscal 2022 with almost $30 billion of long-term debt.
In addition, the Company has also removed all calls to ports in Russia from its itineraries in 2023. The Company reached a significant financial inflection point in March with Operating Cash Flow turning slightly positive. The Company also expects Operating Cash Flow to be positive for the second quarter of 2022.
Norwegian Cruise Line Holdings (NYSE:NCLH) has underperformed in 2021, and that could hold true for 2022 as well. Higher debt levels, dilution, and ongoing COVID issues on cruise ships pose headwinds, although an eventual business recovery is likely.
With the mix of higher inflation and the potential for unemployment to increase, it will be very hard for Norwegian to sustain a bounce-back as it sets its sails for the summer. Count it as another lost season for Norwegian, which saw its shares shed nearly half of their value year-to-date.
In 2022, Viking was named both the #1 River Line and the #1 Ocean Line by Travel + Leisure readers in their annual World's Best Awards, marking 18 years of recognition since 2004.
Is Viking Cruises a Russian company?
The company was established by Torstein Hagen in St. Petersburg, Russia as Viking River Cruises in 1997.
Viking's liquidity is good with our estimate of cash balances of about $1 billion, providing it sufficient runway to get through this period of unprecedented earnings pressure.
Based on the latest financial disclosure, Royal Caribbean Cruises has a Probability Of Bankruptcy of 55%. This is 32.88% higher than that of the Consumer Cyclical sector and significantly higher than that of the Travel Services industry.
Pre-pandemic, the cruise sector contributed $154 billion to the global economy, according to CLIA -- that number dipped nearly 60%, to $63.4 billion for 2020, and led to the loss of half of cruise-supported jobs around the world (totaling 576,000).
Crew Shortages Hit the Entire Cruise Industry
This has largely been due to visa issues slowing down the ability to get crew members onboard. That's a problem the Carnival President Christine Duffy has been working with U.S. authorities to solve the staffing problems, according to a report from Cruisehive.
...
The companies reported the following full-year profits in 2018:
- Carnival: $3.2 billion.
- Royal Caribbean: $1.8 billion.
- Norwegian: $954.8 million.
CCL's stock price did rise by +12% post-results release on June 24, 2022, due to the strong growth in bookings and occupancy for the recent quarter. But Carnival stock isn't a Buy despite the year-to-date stock price correction and better-than-expected Q2 FY 2022 operating metrics.
Like the rest of the industry, Carnival took a big hit from pandemic lockdowns in 2020 halting cruises for a big chunk of the year, with many major operators taking on large amounts of debt to keep their business afloat.
