Back to top

Image: Bigstock

Norwegian (NCLH) to Post Q4 Earnings: Is a Beat in Store?

Read MoreHide Full Article

Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) is scheduled to report fourth-quarter 2018 results on Feb 21, before market open.

In the third quarter, the company delivered impressive results, with earnings and revenues beating the Zacks Consensus Estimate. The bottom line was favored by higher revenues. Also, the top line improved year over year on the back of strong passenger ticket revenues.

Norwegian has an impressive earnings surprise history. The company’s earnings surpassed the consensus mark in each of the trailing four quarters, the average being 9.8%.

Factors at Play

Norwegian is expected to perform well in the fourth quarter of 2018 on the back of higher passenger ticket revenues. Such strong passenger ticket revenues arising from increased demand for cruise travel are expected to boost top-line results in the to-be-reported quarter. The Zacks Consensus Estimate for fourth-quarter 2018 revenues is pegged at $1,395 million, reflecting a rise from $1,250 million in the prior-year quarter.

Notably, the company generates revenues from two sources — Passenger Ticket as well as Onboard and other. We expect strong passenger ticket revenues, which contributes significantly to the top line, to boost results in the to-be-reported quarter. The consensus mark for fourth-quarter 2018 passenger ticket revenues is pegged at $938 million, indicating a rise from $833 million in the prior-year quarter.

Also, Onboard and other revenues are expected to boost the top line in the quarter under discussion. The consensus mark for Onboard and other revenues is pegged at $461 million, reflecting a rise from $416 million in the prior-year quarter.

Moreover, we are positive about the company’s focus on lucrative Chinese market and constant efforts to expand fleet size. We expect an update on its fleet on the conference call.

However, the bottom line is expected to be hurt in the to-be-reported quarter due to high cruise operating expenses. We are also concerned about the company’s high-debt levels.

 

What Does the Model Say?

Our proven model shows that Norwegian is likely to beat estimates in the to-be-reported quarter, as it has the perfect combination of the following key ingredients:

Earnings ESP: Norwegian has an Earnings ESP of +0.95%. The Most Accurate Estimate is at 80 cents per share, higher than the Zacks Consensus Estimate of 79 cents.  You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Norwegian carries a Zacks Rank #3 (Hold). Notably, stocks with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have higher chances of beating estimates.

Meanwhile, we caution against stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Investors interested in the Zacks Consumer Discretionary sector may check other companies with the right combination of elements to beat estimates in the upcoming releases:

Live Nation Entertainment, Inc. (LYV - Free Report) has an Earnings ESP of +3.77% and a Zacks Rank #1.  The company will release fourth-quarter 2018 results on Feb 28. You can see the complete list of today’s Zacks #1 Rank stocks here.

Churchill Downs Incorporated (CHDN - Free Report) has an Earnings ESP of +12.87% and a Zacks Rank #2. The company will release fourth-quarter 2018 results on Feb 27.

AMC Entertainment Holdings, Inc. (AMC - Free Report) has an Earnings ESP of +3.88% and a Zacks Rank #3. The company will release fourth-quarter 2018 results on Feb 28.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>




 

Published in