NEW YORK ( TheStreet) -- Royal Caribbean Cruises (NYSE: RCL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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- RCL's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 3.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- ROYAL CARIBBEAN CRUISES LTD has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ROYAL CARIBBEAN CRUISES LTD increased its bottom line by earning $2.78 versus $2.37 in the prior year. For the next year, the market is expecting a contraction of 35.3% in earnings ($1.80 versus $2.78).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, ROYAL CARIBBEAN CRUISES LTD's return on equity is below that of both the industry average and the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 103.9% when compared to the same quarter one year ago, falling from $93.49 million to -$3.65 million.
-- Written by a member of TheStreet Ratings Staff