Key points
- Norwegian Cruise Lines is the third largest cruise operator and offers three brands, including its namesake, the premium Oceania and the ultra-luxury Regent Seven Seas.
- Norwegian Cruise Line’s 2023 revenue increased 32% over 2019 pre-COVID levels to $8.55 billion, while total revenue per cruise day per passenger also increased 17% over 2019 .
- Norwegian raised guidance for 2024, forecasting full-year profit of $1.23 versus consensus estimates of $1.13.
- 5 stocks we prefer to those of Norwegian Cruise Line
The cruise sector has been the epicenter of the consumer discretionary sector, which was hit hard by the pandemic. Major headlines about the COVID-19 outbreak have caused massive damage to stocks. After experiencing insurmountable turbulence during the decline, the industry has recovered dramatically in the post-pandemic era. Pent-up demand has pushed bookings back to pre-pandemic levels. And some cruise lines have seen bookings go beyond these levels.
Royal Caribbean Cruises Ltd New York Stock Exchange: RCL led the rebound as shares rose from pandemic lows of $55.14 on March 20, 2020, to all-time highs of $141.70 by April 1, 2024. Norwegian Cruise Line Holdings Ltd. NYSE:NCLH still lags behind Royal Caribbean in terms of profitability and stock price recovery, and Carnival Co & plc New York Stock Exchange: CCL it’s a distant third. NCL shares are trading well below all-time highs of $64.10. Could this allow investors to profit from the path to profitability that the market may be pricing in?
Anomaly or delay?
Norwegian operates three brands that cater to all income levels. The namesake company, Norwegian Cruise Lines, offers freestyle cruises with no assigned dining or entertainment times and relaxed dress codes aboard its 19 ships. Its Oceania Cruises includes seven smaller luxury ships specializing in culinary and destination-focused cruises, with capacities from 684 to 1,250 guests. Master chef Jacques Pepin created his culinary program.
Regent Seven Seas is an ultra-luxury experience billed as the world’s most luxurious fleet that can accommodate up to 750 guests aboard its five ships, unlimited shore excursions, all-suite accommodations with private balconies, gourmet dining and airline tickets of return business class.
Daily ascending triangle
NCLH displays a symmetrical triangle pattern on its daily candlestick chart. This is composed of a descending trend line formed at $22.73 on July 12, 2023 and an ascending lower trend line formed at $12.71 on November 10, 2023. A breakout attempt through $20.62 failed on March 28, 2024, when stocks re-entered the range triangle, causing the daily relative strength index to peak in the 70 band and slide through the 40 band as stocks fall back toward the ascending trend line. The pullback support levels are at $17.55, $15.87, $14.14, and $12.71.
Businesses surpass pre-pandemic levels
Norwegian pared losses in 2023 and expects profitability in 2024 driven by record bookings and strong pricing power. For the fourth quarter of 2023, Norwegian reported an EPS loss of 18 cents versus consensus analyst estimates of 14 cents. Net loss was $106.5 million versus $482.5 million in the same period a year earlier. Revenue increased 30.8% year over year to $1.986 billion, beating consensus estimates of $1.960 billion. In the quarter, onboard revenue per cruise day per passenger increased 20% compared to 2019.
Full-year 2023 revenue grew 32% from pre-Covid-19 levels to $8.55 billion. Bookings have reached all-time highs, with prices reflecting some of the best booking weeks in history. Total occupancy reached 102.9%, with total revenue per cruise day per passenger increasing 17% compared to 2019. The balance of advanced ticket sales ended the year at $3.2 billion, up 52% compared to the end of 2019.
Back in the black in 2024
Norwegian raised its EPS forecast for the first quarter of 2024 to 12 cents versus a loss of 20 cents according to consensus estimates. Full-year 2024 EPS is expected to be approximately $1.23 versus consensus estimates of $1.13. The company entered 2024 with all-time highs in booked locations and pricing for its 2024 travel. Net yield is expected to increase 5.5% as reported and nearly 5.4% in constant currency versus to 2023. Adjusted EBITDA is expected to be around $2.2 billion. The company announced that it has ordered 8 new cruise ships for its 3 brands to be delivered over 10 years.
Optimistic comments from the CEO
Norwegian Cruise Line CEO Harry Sommer said 2023 was a milestone year for the company. The last cruise port in Asia Pacific reopens. Consumer demand has rebounded, returning to the fullness and profitability of a dull year. The company also introduced 3 new ships in 2023, 1 for each brand. Onboard revenue generation increased 27% from 2019 levels. Sommer summarized: “In conclusion, our strong revenue growth, combined with our continued focus on improving costs and margins, is expected to drive adjusted EBITDA and adjusted EPS to grow by 18% and 76%, respectively, compared to last year.”
Analyst Ratings and Price Targets for Norwegian Cruise Lines I’m on MarketBeat.
Before you consider Norwegian Cruise Line, you’ll want to hear this.
MarketBeat tracks daily Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Norwegian Cruise Line wasn’t on the list.
While Norwegian Cruise Line currently has a “Hold” rating among analysts, top analysts believe these five stocks are better buys.
View the five stocks here
Do you expect global energy demand to decrease?! If not, it’s time to take a look at how energy stocks can play a role in your portfolio.
Get this free report