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Norwegian Cruise Line (NCLH)
NYSE:NCLH
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Norwegian Cruise Line
(NYSE:NCLH)
Rating:65Neutral
Price Target:
$18.50
▲( 7.43% Upside)
Positive Factors
Consumer Interest
Management observed zero detectable change in demand behavior despite macroeconomic challenges, indicating stability in consumer interest.
Investments and Demand
NCLH's investments in Great Stirrup Cay and new ships should drive demand.
Negative Factors
Bookings and Yield
The company called out some ‘softening’ in bookings which is reflected in a downward tweak to 2025 yield expectations.
Competitive Position
The report is not as strong as RCL's and highlights NCLH's less competitive position in the Caribbean market.
Norwegian Cruise Line (NCLH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.12B
Dividend YieldN/A
Average Volume (3M)16.37M
Price to Earnings (P/E)10.5
Beta (1Y)1.66
Revenue Growth5.57%
EPS Growth141.01%
CountryUS
Employees41,700
SectorConsumer Cyclical
Sector Strength74
IndustryTravel Services
Share Statistics
EPS (TTM)0.07
Shares Outstanding446,806,730
10 Day Avg. Volume14,277,037
30 Day Avg. Volume16,373,789
Financial Highlights & Ratios
PEG Ratio-1.56
Price to Book (P/B)5.51
Price to Sales (P/S)0.00
P/FCF Ratio-14.24
Enterprise Value/Market Cap2.68
Enterprise Value/Revenue0.58
Enterprise Value/Gross Profit6.03
Enterprise Value/Ebitda2.49
Forecast
1Y Price Target
$24.40Price Target Upside41.70% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering20
Norwegian Cruise Line Business Overview & Revenue Model
Company DescriptionNorwegian Cruise Line Holdings Ltd. (NCLH) is a leading global cruise company that operates the Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises brands. The company offers a wide range of cruise experiences, catering to various customer preferences, from contemporary to luxury. NCLH provides unique itineraries to over 490 destinations worldwide, offering guests a wide array of amenities and experiences on board their state-of-the-art ships.
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 is experiencing a notable recovery in terms of profitability and operational efficiency, as evident in its income statement. However, the balance sheet reveals high leverage, which could pose risks in a volatile market. Cash flow challenges persist with negative free cash flow, emphasizing the need for careful capital management. Despite improvements, the company must address leverage and cash flow issues to ensure sustainable growth.Income Statement
Norwegian Cruise Line shows a substantial recovery in revenue and profitability metrics. The gross profit margin for the TTM (Trailing-Twelve-Months) is approximately 38.2%, indicating strong operational efficiency. The net profit margin has improved to 9.1%, showcasing a positive turnaround from previous losses. Revenue growth is evident, although there was a slight decline of 0.67% from 2024 to the TTM. The EBIT and EBITDA margins are healthy at 15.5% and 20.9% respectively, indicating good profitability. However, the slight revenue decline and past years' volatility still pose some risk.65
Positive
Balance Sheet
The balance sheet presents a challenging picture with a high debt-to-equity ratio of approximately 9.88, indicating substantial leverage which could pose financial risks. The return on equity for the TTM is a strong 60.2%, driven by improved net income, but this is partly due to low equity. The equity ratio is a low 6.6%, reflecting limited shareholder equity in proportion to assets. Despite the strong ROE, the high leverage remains a concern for long-term stability.50
Neutral
Cash Flow
The cash flow statement shows improvement in operating cash flow, with an operating cash flow to net income ratio of 2.25, indicating efficient cash generation relative to earnings. However, free cash flow has declined significantly, showing a negative free cash flow to net income ratio, as capital expenditures outpace cash generated from operations. The free cash flow growth rate is negative, which is a concern for cash sustainability and future investments.45
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 9.42B | 9.48B | 8.55B | 4.84B | 647.99M | 1.28B | Gross Profit |
| 3.60B | 3.79B | 3.08B | 576.67M | -960.05M | -413.15M | EBIT |
| 1.46B | 1.47B | 930.91M | -1.55B | -2.55B | -3.48B | EBITDA |
| 1.96B | 2.45B | 1.75B | -729.94M | -1.79B | -2.80B | Net Income Common Stockholders |
| 852.61M | 910.26M | 166.18M | -2.27B | -4.51B | -4.01B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 559.81M | 190.76M | 402.42M | 946.99M | 1.75B | 3.30B | Total Assets |
| 19.83B | 19.97B | 19.49B | 18.56B | 18.73B | 18.40B | Total Debt |
| 14.43B | 13.10B | 14.73B | 13.62B | 12.45B | 11.81B | Net Debt |
| 13.87B | 12.91B | 14.32B | 12.67B | 10.94B | 8.51B | Total Liabilities |
| 19.46B | 18.54B | 19.19B | 18.49B | 16.30B | 14.05B | Stockholders Equity |
| 362.09M | 1.43B | 300.81M | 68.59M | 2.43B | 4.35B |
| Cash Flow | Free Cash Flow | ||||
| -555.45M | 838.87M | -744.65M | -1.57B | -3.22B | -3.50B | Operating Cash Flow |
| 1.92B | 2.05B | 2.01B | 210.02M | -2.47B | -2.56B | Investing Cash Flow |
| -2.51B | -1.23B | -2.90B | -1.76B | -1.00B | -975.36M | Financing Cash Flow |
| 209.06M | -1.03B | 346.86M | 986.22M | 1.68B | 6.58B |
Norwegian Cruise Line Technical Analysis
Negative
17.22
Price Trends
18.01
Negative
21.73
Negative
22.01
Negative
Market Momentum
0.17
Negative
43.23
Neutral
35.29
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 17.22 is below the 20-day moving average (MA) of 17.85, below the 50-day MA of 18.01, and below the 200-day MA of 22.01, indicating a bearish trend. The MACD of 0.17 indicates Negative momentum. The RSI at 43.23 is Neutral, neither overbought nor oversold. The STOCH value of 35.29 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 2 New Risks
1.
A failure to keep pace with developments in technology could impair our operations or competitive position. Q4, 2024
2.
Our use of artificial intelligence ("AI") technologies may present business, compliance, and reputational risks. Q4, 2024
Norwegian Cruise Line Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $82.77B | 32.09 | 32.06% | ― | 9.68% | -47.83% | |
75 Outperform | $67.67B | 20.93 | 49.55% | 0.68% | 13.66% | 49.86% | |
75 Outperform | $11.39B | 119.24 | 8.33% | ― | 28.51% | 367.34% | |
74 Outperform | $20.66B | 19.15 | 119.16% | 0.25% | 5.57% | 61.19% | |
74 Outperform | $42.59B | 18.53 | 12.49% | 0.44% | 16.23% | 56.05% | |
65 Neutral | $8.12B | 10.50 | 95.87% | ― | 5.57% | 141.01% | |
62 Neutral | $6.97B | 11.36 | 2.77% | 3.91% | 2.66% | -22.00% |
* Consumer Cyclical Sector Average
Performance Comparison
NCLH
Norwegian Cruise Line
17.44
1.87
12.01%
TCOM
Trip.com Group Sponsored ADR
61.06
9.34
18.06%
EXPE
Expedia
160.72
50.46
45.76%
MMYT
Makemytrip
100.64
25.99
34.82%
RCL
Royal Caribbean
237.75
92.63
63.83%
ABNB
Airbnb
127.65
-13.39
-9.49%
Norwegian Cruise Line Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: -0.92%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong start to the year with noteworthy achievements in revenue growth, fleet expansion, and strategic initiatives. However, there are challenges with European bookings and FX losses impacting earnings slightly. Overall, the positive developments and strategic focus outweigh the short-term challenges.Q1-2025 Updates
Positive Updates
Strong First Quarter Performance
Net yields increased by 1.2% above expectations, driving adjusted EBITDA to $453 million, above guidance. Trailing 12-month margin improved by 280 basis points to 35.5%.
Successful Delivery of Norwegian Aqua
Norwegian Aqua, part of the new Prima Plus class, was delivered on time and on budget. The ship features innovative amenities such as the Aqua slide coaster, enhancing guest experience while optimizing space.
Enhancements at Great Stirrup Cay
New pier to dock two ships simultaneously and multiple upgrades planned, including a resort-style pool and family zone, aiming to boost guest satisfaction and increase annual guest numbers to over a million by 2026.
Fleet Optimization Strategy
Completion of drydock enhancements for Norwegian Bliss and Breakaway, and strategic repurposing of older ships to boost operational efficiency.
Digital Success with Revamped NCL App
Over 800,000 guests used the app in the quarter, boosting pre-booked onboard spend and enhancing guest experience.
Cost Efficiency Initiatives
Identified $300 million in cost-saving initiatives, maintaining a strong focus on delivering exceptional guest experience without cutting costs in critical areas.
Positive Booking Trends for 2026
Bookings for 2026 are ahead of historical averages with higher prices, indicating strong future demand.
Negative Updates
Adjusted EPS Impacted by FX Losses
Adjusted EPS was $0.07, slightly below guidance due to a $0.05 impact from foreign exchange losses.
Choppiness in European Bookings
Observed booking volatility for Q3 European itineraries, partially due to macroeconomic uncertainty, impacting occupancy levels.
Booking and Pricing Challenges
Some choppiness in Q3 led to prioritizing price over load factor, affecting yield growth outlook to a range of 2% to 3%.
Company Guidance
During Norwegian Cruise Line Holdings' first quarter 2025 earnings call, CEO Harry Sommer highlighted that the company met or exceeded guidance across all key metrics. Net yields increased by 1.2% above expectations, leading to an adjusted EBITDA of $453 million, surpassing guidance. The trailing 12-month margin improved by 280 basis points to 35.5%. Adjusted EPS was slightly below guidance at $0.07, impacted by a $0.05 FX headwind. Norwegian Aqua, the company's new Prima Plus class ship, was delivered on time and on budget, reflecting a focus on balancing ROI and ROX. Initiatives like enhancements at Great Stirrup Cay and a revamped NCL app are expected to drive guest satisfaction and financial performance. Booking trends showed strong advanced ticket sales, although the company noted some choppiness in Q3 bookings, mainly for European itineraries. Despite this, the company maintains its full-year adjusted EBITDA and adjusted EPS guidance, supported by cost-saving initiatives targeting $300 million in efficiencies.Norwegian Cruise Line Corporate Events
Executive/Board Changes
Norwegian Cruise Line Expands Board, Appoints New Director
Neutral
May 8, 2025
On May 7, 2025, Norwegian Cruise Line Holdings Ltd. expanded its Board of Directors from eight to nine members, appointing Ms. Linda P. Jojo as an independent director. Ms. Jojo will also serve on the Technology, Environmental, Safety and Security Committee and receive compensation in cash and restricted share units, with an option to convert cash retainers to RSUs starting in 2026.
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.