By Callum Keown

Royal Caribbean stock jumped early Tuesday after the cruise operator beat earnings expectations and even hiked its full-year guidance.

The shares rose 2.8% to $222.25 in premarket trading.

The company reported adjusted earnings of $2.71 per share on sales of $4 billion. Analysts were expecting earnings of $2.55 per share from sales of $4 billion.

But the hike to full-year guidance is particularly notable given that other travel companies, including major U.S. airlines have been withdrawing their guidance this earnings season citing macroeconomic uncertainty.

Royal Caribbean now expects EPS of between $14.55 and $15.55 this year, up from its previous range of $14.35 and $14.65.

"The increase in earnings expectations is driven by the better than expected revenue performance in the first quarter and the benefit of currency exchange rates and lower fuel costs for the remainder of the year," the company said.

This is breaking news. Read a preview of Royal Caribbean's earnings below and check back for more analysis soon.

Royal Caribbean's earnings Tuesday will be a test of the demand for cruises as uncertainty grows about the world economy.

Up to now, the cruise industry has been steadfast in its view that bookings and prices remain strong. The stock market has a different take, fearing that it is only a matter of time before the travel slowdown being reported by airlines starts to hit cruise operators.

Cruise stocks have had a tough year, though Royal Caribbean has outperformed. As of the close of trading on Monday, it had fallen 6.2% so far in 2025, compared with a 24% drop for Carnival and Norwegian Cruise Line's 32% decline . The S&P 500 was down 6%.

Carnival raised its financial forecasts for the current fiscal year when it reported its first-quarter earnings last month. But that was before President Donald Trump unveiled his plan for so-called reciprocal tariffs, with a 10% levy on almost all countries and higher rates than that on many.

If Royal Caribbean were to raise its financial forecasts Tuesday, that would certainly signal confidence. It would stand out because major U.S. airlines, including Delta Air Lines and American Airlines, withdrew their financial guidance this month.

An increase isn't out of the question. The company previously told investors to expect earnings per share of between $14.35 and $14.65. The consensus call for annual EPS among analysts tracked by FactSet is for $14.94.

There are reasons to believe the cruise sector can remain more resilient than other parts of the travel industry.

The slowdown in air travel is most pronounced for domestic flights and among price-sensitive or corporate consumers, which aren't the cruise industry's typical customers. International and premium travel demand is staying robust, airline earnings have shown. That is a good sign for cruise operators.

"Cruise lines could potentially thread the needle as core leisure demand remains solid, they have a relative pricing advantage and could limit new bookings for 2026 until there is further stability," Melius Research analyst Conor Cunningham said Sunday.

Royal Caribbean is scheduled to report its first-quarter results before the open Tuesday. Analysts expect earnings of $2.55 per share from sales of $4 billion, up from EPS of $1.77 from revenue of $3.7 billion in the same period last year. Wall Street also expects the cruise operator's second-quarter financial guidance to be strong: It is looking for EPS of $3.97, compared with the $3.21 it reported in the second quarter of 2024.

The problem is the uncertainty. "Anything outside of 2Q has been somewhat dismissed as speculative given the fluidity in the world," Cunningham said.

So even better earnings than expected, higher financial forecasts, and upbeat commentary about demand may not assuage investors' concerns about the outlook.

Write to Callum Keown at callum.keown@dowjones.com

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April 29, 2025 06:57 ET (10:57 GMT)

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