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Norwegian Cruise Line (NCLH)
NYSE:NCLH
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Norwegian Cruise Line
(NYSE:NCLH)
63Neutral
Positive Factors
Business Growth
Strong travel demand and ongoing fleet expansion combined with premium vacation experiences, consistent service, execution, disciplined cost management, and strategic growth initiatives will continue to drive accelerating Business Performance trends.
Consumer Demand
Management observed zero detectable change in demand behavior despite macroeconomic challenges, indicating stability in consumer interest.
Financial Performance
NCLH reported 4Q24 EPS/EBITDA that beat forecasts, indicating strong financial performance.
Negative Factors
Financial Leverage
NCLH has the highest leverage among publicly traded cruise companies, with significant debt maturities approaching.
Market Sentiment
Concerns around the US consumer have clearly weighed on the shares, with NCLH shares down significantly year-to-date.
Tax Status
The prospect of losing tax-exempt status is a concern for the cruise industry and is viewed as a potential risk.
Norwegian Cruise Line (NCLH) vs. S&P 500 (SPY)
Market Cap
$7.18B
Dividend YieldN/A
Average Volume (3M)15.87M
Price to Earnings (P/E)9.2
Beta (1Y)1.73
Revenue Growth10.87%
EPS Growth433.82%
CountryUS
Employees41,700
SectorConsumer Cyclical
Sector Strength46
IndustryTravel Services
Share Statistics
EPS (TTM)1.77
Shares Outstanding439,944,820
10 Day Avg. Volume11,388,132
30 Day Avg. Volume15,866,282
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)N/A
Price to Sales (P/S)0.95
Price to Cash Flow (P/CF)5.60
P/FCF Ratio14.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$29.07Price Target Upside85.28% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
Norwegian Cruise Line Business Overview & Revenue Model
Company DescriptionNorwegian Cruise Line Holdings Ltd., together with its subsidiaries, operates as a cruise company in North America, Europe, the Asia-Pacific, and internationally. The company operates the Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises brands. It offers itineraries ranging from three days to a 180-days calling on various locations, including destinations in Scandinavia, Russia, the Mediterranean, the Greek Isles, Alaska, Canada and New England, Hawaii, Asia, Tahiti and the South Pacific, Australia and New Zealand, Africa, India, South America, the Panama Canal, and the Caribbean. As of December 31, 2021, the company had 28 ships with approximately 59,150 berths. It distributes its products through retail/travel advisor and onboard cruise sales channels, as well as meetings, incentives, and charters. Norwegian Cruise Line Holdings Ltd. was founded in 1966 and is based in Miami, Florida.
How the Company Makes MoneyNorwegian Cruise Line Holdings Ltd. generates revenue primarily through the sale of cruise tickets and onboard services. Ticket sales account for the majority of the company's income, as passengers pay for stateroom accommodations, dining, and entertainment while on board. Additionally, NCLH earns significant revenue from onboard offerings such as specialty dining, beverage packages, shore excursions, spa services, and retail sales. The company also benefits from partnerships with travel agencies and tour operators who help market and sell their cruise vacations. Ancillary revenue streams include casino operations, internet services, and photography sales, contributing to the overall financial performance of the company.
Norwegian Cruise Line Financial Statement Overview
Summary
Norwegian Cruise Line has shown a strong recovery with revenue growth and positive net income. However, the high debt levels and low equity ratio present financial risks.Income Statement
Norwegian Cruise Line has shown significant recovery in recent years, with total revenue growing from $4.8 billion in 2022 to $9.5 billion in 2024. The gross profit margin improved to 40% in 2024, indicating better cost management. Net income turned positive in 2024 with a net profit margin of 9.6%, a notable improvement from the negative figures in previous years. However, EBIT and EBITDA margins, at 15.5% and 9.7% respectively, show room for further operational efficiency improvements.68
Positive
Balance Sheet
The company maintains a high debt-to-equity ratio, reflected by $13.1 billion in total debt against $1.4 billion in stockholders' equity in 2024, indicating high leverage. Although stockholders' equity has improved from previous years, the equity ratio remains low at 7.1%, indicating that most assets are financed through debt. This poses a risk given potential interest rate fluctuations and economic uncertainty.45
Neutral
Cash Flow
Norwegian Cruise Line has shown strong cash flow management, with operating cash flow increasing to $2.0 billion in 2024. The free cash flow turned positive in 2024 at $839 million, a significant improvement from negative figures in 2023. The operating cash flow to net income ratio is favorable, indicating efficient cash generation relative to earnings. However, the free cash flow to net income ratio suggests reliance on operating cash flow rather than net income.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 9.48B | 8.55B | 4.84B | 647.99M | 1.28B | Gross Profit |
| 3.79B | 3.08B | 576.67M | -960.05M | -413.15M | EBIT |
| 1.47B | 930.91M | -1.55B | -2.55B | -3.48B | EBITDA |
| 2.49B | 1.75B | -729.94M | -1.79B | -2.80B | Net Income Common Stockholders |
| 910.26M | 166.18M | -2.27B | -4.51B | -4.01B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 190.76M | 402.42M | 946.99M | 1.75B | 3.30B | Total Assets |
| 19.97B | 19.49B | 18.56B | 18.73B | 18.40B | Total Debt |
| 13.10B | 14.73B | 13.62B | 12.45B | 11.81B | Net Debt |
| 12.91B | 14.32B | 12.67B | 10.94B | 8.51B | Total Liabilities |
| 18.54B | 19.19B | 18.49B | 16.30B | 14.05B | Stockholders Equity |
| 1.43B | 300.81M | 68.59M | 2.43B | 4.35B |
| Cash Flow | Free Cash Flow | |||
| 838.87M | -744.65M | -1.57B | -3.22B | -3.50B | Operating Cash Flow |
| 2.05B | 2.01B | 210.02M | -2.47B | -2.56B | Investing Cash Flow |
| -1.23B | -2.90B | -1.76B | -1.00B | -975.36M | Financing Cash Flow |
| -1.03B | 346.86M | 986.22M | 1.68B | 6.58B |
Norwegian Cruise Line Technical Analysis
Negative
15.69
Price Trends
23.01
Negative
24.78
Negative
22.19
Negative
Market Momentum
-1.09
Negative
35.02
Neutral
25.18
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NCLH, the sentiment is Negative. The current price of 15.69 is below the 20-day moving average (MA) of 19.18, below the 50-day MA of 23.01, and below the 200-day MA of 22.19, indicating a bearish trend. The MACD of -1.09 indicates Negative momentum. The RSI at 35.02 is Neutral, neither overbought nor oversold. The STOCH value of 25.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NCLH.
Norwegian Cruise Line Risk Analysis
Norwegian Cruise Line disclosed 32 risk factors in its most recent earnings report. Norwegian Cruise Line reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Norwegian Cruise Line Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $160.60B | 28.85 | 5.54% | 1.07% | 3.97% | 89.53% | |
75 Outperform | $50.77B | 17.25 | 46.85% | 0.90% | 18.60% | 65.95% | |
66 Neutral | $22.48B | 10.99 | 25.87% | ― | 12.66% | 403.58% | |
64 Neutral | $11.08B | 9.11 | 36.45% | 0.52% | -6.41% | 511.40% | |
63 Neutral | $7.18B | 9.20 | 105.46% | ― | 10.87% | 433.82% | |
59 Neutral | $12.18B | 11.09 | -1.08% | 3.77% | 1.26% | -19.82% | |
44 Neutral | $469.44M | ― | 21.42% | ― | 13.20% | 28.95% |
* Consumer Cyclical Sector Average
Performance Comparison
NCLH
Norwegian Cruise Line
15.69
-3.70
-19.08%
CCL
Carnival
16.50
0.84
5.36%
H
Hyatt Hotels
109.76
-46.89
-29.93%
RCL
Royal Caribbean
177.93
40.76
29.71%
DIS
Walt Disney
83.53
-32.77
-28.18%
LIND
Lindblad Expeditions Holdings
8.01
-0.23
-2.79%
Norwegian Cruise Line Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -37.37% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue growth and effective cost management, offset by challenges in occupancy and geopolitical factors. The company's strategic initiatives, including fleet expansion and sustainability efforts, position it well for future growth. While some segments face moderate growth, the overall performance and outlook remain robust.Highlights
Record-Breaking Revenue and Growth
Net yield increased by a record 10% in 2024, surpassing initial February guidance by 450 basis points. Adjusted EBITDA and adjusted EPS also reached record levels, demonstrating strong execution and market demand.
Successful Cost Management
Achieved cost savings targets with only a $1 increase in adjusted net cruise cost ex fuel per capacity day in 2024. This reflects a significant improvement in cost management despite inflationary pressures.
Capacity Expansion and Innovation
Announced a historic fleet expansion with 13 ships on order, including two new state-of-the-art vessels debuting in 2025, Norwegian Aqua and Oceania's Allura, featuring innovative attractions and enhanced guest experiences.
Sustainability Initiatives
Received notable recognition for sustainability efforts, including the ESG Leader Gold Award and an A rating from MSCI. Significant progress in reducing environmental impact with nearly half of the fleet tested with biodiesel blends.
Lowlights
Impact of Repositioning on Occupancy
First quarter 2025 occupancy is expected to be down by 3% year-over-year, due to large ships repositioning for dry docks, impacting load factors and pricing.
Moderate Growth in Luxury Brands
Slower growth observed in luxury brands as they absorb outsized capacity growth, leading to more modest yield performance compared to the company's largest brand.
Geopolitical and Currency Headwinds
Challenges include geopolitical uncertainties and a strong U.S. dollar, which introduced a $70 million headwind from both FX and fuel, impacting the financial outlook.
Company Guidance
During the Norwegian Cruise Line Holdings Fourth Quarter and Full Year 2024 Earnings Conference Call, guidance for the upcoming fiscal year indicated strong projections based on the company's solid performance in 2024. The company reported record results with revenue and net yield outperforming expectations, driving margins up by nearly 500 basis points and achieving a record adjusted EBITDA. For 2025, the company anticipates a net yield growth of 3% across the year, with a more robust growth of 3.5% in the last three quarters, driven by a 4.6% increase in pricing. Adjusted net cruise cost excluding fuel is expected to rise by only 1.25%, reflecting disciplined cost management. The company also highlighted a 4.5% pricing increase forecasted for 2025, supported by strong demand, particularly for Europe and Alaska sailings. Additionally, Norwegian Cruise Line Holdings plans to deliver two new ships in 2025, Norwegian Aqua and Oceania's Allura, contributing to an anticipated 7% capacity growth. The guidance underscores the company's continued focus on enhancing guest experiences and maintaining cost efficiencies to achieve its 2026 financial and sustainability targets.Norwegian Cruise Line Corporate Events
Executive/Board Changes
Norwegian Cruise Line Appoints John Chidsey to Board
Neutral
Feb 7, 2025
On February 5, 2025, Norwegian Cruise Line Holdings Ltd. appointed Mr. John Chidsey as a member of its Board of Directors. Mr. Chidsey, recognized as an independent director, will also serve as Chairperson of the Nominating and Governance Committee and as a member of the Audit Committee. His compensation package includes an annual cash retainer, committee-specific retainers, and restricted share units, with the option to receive part of his compensation as RSUs starting in 2026. This appointment reflects the company’s efforts to strengthen its governance and oversight, potentially impacting its strategic direction and offering reassurance to stakeholders about its commitment to robust corporate governance practices.
Private Placements and FinancingBusiness Operations and Strategy
Norwegian Cruise Line Optimizes Debt and Liquidity Strategy
Positive
Jan 22, 2025
On January 22, 2025, NCL Corporation Ltd., a subsidiary of Norwegian Cruise Line Holdings, successfully completed a private offering of $1.8 billion in senior notes due 2032. The proceeds were used to redeem existing senior notes due 2026 and 2028, which is expected to streamline the company’s debt obligations. Additionally, NCLC entered into a Seventh Amended and Restated Credit Agreement to increase its revolving loan facility to $1.7 billion, enhancing its financial flexibility. These strategic financial moves are likely to impact NCLC’s liquidity and debt management positively, positioning the company more favorably in the competitive cruise industry.
Executive/Board ChangesBusiness Operations and Strategy
Norwegian Cruise Line Financial Moves and Leadership Change
Positive
Jan 6, 2025
Norwegian Cruise Line Holdings Ltd. has decided to repay and terminate several credit facilities, including Breakaway One, Breakaway Two, Riviera, and Marina on January 3, 2025. These strategic financial moves are aimed at enhancing the company’s financial stability and positioning in the competitive cruise industry. Additionally, the company announced a leadership change with Ms. Andrea DeMarco stepping down as President of Regent Seven Seas Cruises, to be succeeded by Mr. Jason Montague as Chief Luxury Officer, indicating a shift in focus towards strengthening luxury cruise operations.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.