It has been about a month since the last earnings report for Norwegian Cruise Line (NCLH Quick QuoteNCLH - Free Report) . Shares have added about 39.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Norwegian Cruise Line due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Norwegian Cruise Q3 Earnings Miss, Revenues Beat   

Norwegian Cruise Line reported third-quarter 2020 results, wherein the bottom line missed the Zacks Consensus Estimate but the top line surpassed the same. Notably, both earnings and revenues declined sharply year over year due to cruises suspension on account of the coronavirus pandemic.

Earnings & Revenue Discussion

The company reported adjusted loss per share of $2.35, wider than the Zacks Consensus Estimate of a loss of $2.24. Notably, the company had reported earnings per share of $2.23 in the prior-year quarter.

Revenues of $6.5 million beat the consensus mark of $1 million. However, the figure declined 99.7% year over year. The downside can be attributed to decline of 99.7% and 99.7% in passenger ticket revenues and onboard and other revenues, respectively.

Expenses & Operating Results

Total cruise operating expenses plunged 80.8% in the quarter under review from the year-ago quarter. The company’s expenses in the quarter were primarily stemmed from crew costs, which include salaries, food and other repatriation costs, fuel, and other ongoing expenses such as insurance and ship maintenance.

Gross cruise costs per capacity day declined 72.2%. Adjusted Net cruise costs (excluding fuel) per Capacity Day were down 60.6% at cc. Fuel price per metric ton (net of hedges) was up 17.5% to $592 in the quarter under review.

Net interest expenses were $139.7 million in the third quarter, up from $60.2 million in the year-ago quarter.

Balance Sheet

Cash and cash equivalents as of Sep 30, 2020, were $2.4 billion, up from $252.9 million as of Dec 31, 2019. Long-term debt at the end of the third quarter totaled $10.5 billion, higher than $6.1 billion at the end of 2019.

Due to the pandemic, the company’s monthly cash burn was on average, nearly $150 million per month. However, for the fourth quarter, the company anticipates monthly cash burn to be nearly $175 million owing to the timing of interest expense.

Outlook

The company has already withdrawn 2020 guidance on account of the temporary suspension of sailings globally. It expects to report net loss both on GAAP and adjusted basis for the fourth quarter and 2020. Since the beginning of the coronavirus outbreak, its bookings remained below historical levels. However, overall the company is witnessing demand for the second half of 2021.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -14.02% due to these changes.

VGM Scores

At this time, Norwegian Cruise Line has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Norwegian Cruise Line has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.