In a bid to tide over the coronavirus crisis, Royal Caribbean (NYSE:RCL) Cruises Ltd. RCL continues to boost its liquidity. The company is raising an additional $2 billion in senior notes and convertible notes, both of which will mature on Jun 15, 2023.
On May 19, 2020, the company completed its $3.3 billion senior secured notes offering. Earlier, it announced that with the suspension of its cruise operations, its estimated cash burn is likely to be in the range of $250-$275 million per month. This includes ongoing ship operating expenses, administrative expenses, debt service, hedging costs and the anticipated necessary CapEx.
The leisure industry is currently grappling with the pandemic chaos and Royal Caribbean isn’t immune to this downturn. Travel warnings and cruise cancellations are starting to take a toll on the company. In fact, the deadly COVID_19 outbreak persuaded management to withdraw 2020 guidance. Notably, in April 2020, the Centers for Disease Control (CDC) extended the "No Sail Order" for cruise ships by nearly three months. Further, the unprecedented situation significantly reduced bookings for 2020. In the current scenario, most companies are focusing on bolstering its cash position as well as cost-cutting measures.
Management confirmed that bookings still remain suppressed but the metric is now better than its mid-April-levels, driven by improved trends for fourth-quarter 2020 and 2021 sales. The company also affirmed that next-year bookings are within its historical range. Current bookings indicate decent demand for cruising.
Royal Caribbean, which shares space with Norwegian Cruise Line (NYSE:NCLH) Holdings Ltd. NCLH and Carnival (NYSE:CUK) Corporation & Plc CCL, currently has a Zacks Rank #3 (Hold). The stock has plunged 56.8% year to date against the industry’s rally of 41.7%.
Key Pick
A better-ranked stock in the same space is Camping World Holdings (NYSE:CWH), Inc. CWH, which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Camping World’s earnings in the current year are likely to witness skyrocketing growth of 193.9%.
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Carnival Corporation (CCL): Free Stock Analysis Report
Royal Caribbean Cruises Ltd. (RCL): Free Stock Analysis Report
Camping World Holdings Inc. (CWH): Free Stock Analysis Report
Norwegian Cruise Line Holdings Ltd. (NCLH): Free Stock Analysis Report
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