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Norwegian Cruise (NCLH) Up 44% in a Month: What's Driving It?
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Shares of Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) have surged 44.3% in the past month, compared with the industry’s rally of 18.1%. The company has been benefiting from a robust booking environment and fleet size expansion.
The company’s top and bottom lines in 2022 are likely to witness growth of 768.4% and 78.2%, respectively, year over year. Let’s delve deeper and analyze the factors driving the stock higher.
Growth Drivers
The coronavirus pandemic has severely affected the company’s booking. During the later part of fourth-quarter 2021, the company witnessed a slowdown in booking activity, primarily due to the Omicron variant of COVID-19. As of Dec 31, the company’s advance ticket sales (including the long-term portion) were $1.8 billion. The amount includes FCCs worth approximately $0.7 billion. With cases subsiding, the company reported sequential improvements in net booking volumes and stated that bookings for the second half of 2022 are in line with 2019 levels. Management stated that bookings for 2023 remained strong compared with 2020 and 2019 levels.
Norwegian Cruise is constantly looking to expand its fleet size, which is currently at 28. It has plans to introduce nine more ships through 2027. Most of them are on order for the Norwegian Cruise Line, while the rest are for Oceania Cruises and Regent Seven Seas Cruises. For the Regent brand, it has one Explorer Class Ship to be delivered in 2023. For the Oceania Cruises brand, the company has two Allura Class Ships to be delivered in 2023 and 2025. With Project Leonardo, Norwegian Cruise will have an additional six ships with expected delivery dates from 2022 through 2027.
The Zacks Rank #3 (Hold) company continues to execute phased relaunch plans for all 28 ships. The company was operating at nearly 70% of its capacity by the end of the fourth quarter of 2021. In the quarter under review, occupancy was 51.4%. Norwegian Cruise anticipates operating at 85% capacity by the first quarter of 2022. Its 16 ships have resumed operations as of Mar 1, 2022. The company expects its occupancy to reach the pre-pandemic level across its fleet no later than the beginning of the third quarter of 2022. Most of the countries in the EU are now allowing travelers from the United States.
Maintaining liquidity has become a herculean task amid the coronavirus pandemic for most companies. Cash and cash equivalents as of Dec 31, 2021, were $1.5 billion, down from $1.9 billion as of Sep 30, 2021. However, the company has enhanced its liquidity profile by entering into a commitment worth one billion through mid-August 2022. Although total debt as of Dec 31, 2021, was $11.6 billion (compared with $11.9 billion as of Sep 30, 2021), it is confident that with the amount of liquidity it holds, it can survive for some time.
Funko sports a Zacks Rank #1 (Strong Buy) at present. FNKO has a trailing four-quarter earnings surprise of 96.2%, on average. Shares of the company have declined 18.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Funko’s current financial-year sales and EPS (earnings per share) suggests growth of 22.6% and 26.8%, respectively, from the year-ago period’s reported levels.
Boyd Gaming presently carries a Zacks Rank #2 (Buy). BYD has a trailing four-quarter earnings surprise of 48.8%, on average. Shares of the company have gained 4.9% in the past year.
The Zacks Consensus Estimate for BYD’s current financial-year sales and EPS indicates growth of 2.3% and 2.9%, respectively, from the year-ago period’s reported levels.
Bluegreen Vacations presently carries a Zacks Rank #2. BVH has a trailing four-quarter earnings surprise of 425.1%, on average. The stock has increased 32.7% in the past year.
The Zacks Consensus Estimate for BVH’s current financial-year sales and EPS indicates growth of 8.3% and 20.8%, respectively, from the year-ago period’s reported levels.
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Norwegian Cruise (NCLH) Up 44% in a Month: What's Driving It?
Shares of Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) have surged 44.3% in the past month, compared with the industry’s rally of 18.1%. The company has been benefiting from a robust booking environment and fleet size expansion.
The company’s top and bottom lines in 2022 are likely to witness growth of 768.4% and 78.2%, respectively, year over year. Let’s delve deeper and analyze the factors driving the stock higher.
Growth Drivers
The coronavirus pandemic has severely affected the company’s booking. During the later part of fourth-quarter 2021, the company witnessed a slowdown in booking activity, primarily due to the Omicron variant of COVID-19. As of Dec 31, the company’s advance ticket sales (including the long-term portion) were $1.8 billion. The amount includes FCCs worth approximately $0.7 billion. With cases subsiding, the company reported sequential improvements in net booking volumes and stated that bookings for the second half of 2022 are in line with 2019 levels. Management stated that bookings for 2023 remained strong compared with 2020 and 2019 levels.
Norwegian Cruise is constantly looking to expand its fleet size, which is currently at 28. It has plans to introduce nine more ships through 2027. Most of them are on order for the Norwegian Cruise Line, while the rest are for Oceania Cruises and Regent Seven Seas Cruises. For the Regent brand, it has one Explorer Class Ship to be delivered in 2023. For the Oceania Cruises brand, the company has two Allura Class Ships to be delivered in 2023 and 2025. With Project Leonardo, Norwegian Cruise will have an additional six ships with expected delivery dates from 2022 through 2027.
The Zacks Rank #3 (Hold) company continues to execute phased relaunch plans for all 28 ships. The company was operating at nearly 70% of its capacity by the end of the fourth quarter of 2021. In the quarter under review, occupancy was 51.4%. Norwegian Cruise anticipates operating at 85% capacity by the first quarter of 2022. Its 16 ships have resumed operations as of Mar 1, 2022. The company expects its occupancy to reach the pre-pandemic level across its fleet no later than the beginning of the third quarter of 2022. Most of the countries in the EU are now allowing travelers from the United States.
Maintaining liquidity has become a herculean task amid the coronavirus pandemic for most companies. Cash and cash equivalents as of Dec 31, 2021, were $1.5 billion, down from $1.9 billion as of Sep 30, 2021. However, the company has enhanced its liquidity profile by entering into a commitment worth one billion through mid-August 2022. Although total debt as of Dec 31, 2021, was $11.6 billion (compared with $11.9 billion as of Sep 30, 2021), it is confident that with the amount of liquidity it holds, it can survive for some time.
Image Source: Zacks Investment Research
Key Picks
Some better-ranked stocks in the Consumer Discretionary sector are Funko, Inc. (FNKO - Free Report) , Boyd Gaming Corporation (BYD - Free Report) and Bluegreen Vacations Holding Corporation .
Funko sports a Zacks Rank #1 (Strong Buy) at present. FNKO has a trailing four-quarter earnings surprise of 96.2%, on average. Shares of the company have declined 18.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Funko’s current financial-year sales and EPS (earnings per share) suggests growth of 22.6% and 26.8%, respectively, from the year-ago period’s reported levels.
Boyd Gaming presently carries a Zacks Rank #2 (Buy). BYD has a trailing four-quarter earnings surprise of 48.8%, on average. Shares of the company have gained 4.9% in the past year.
The Zacks Consensus Estimate for BYD’s current financial-year sales and EPS indicates growth of 2.3% and 2.9%, respectively, from the year-ago period’s reported levels.
Bluegreen Vacations presently carries a Zacks Rank #2. BVH has a trailing four-quarter earnings surprise of 425.1%, on average. The stock has increased 32.7% in the past year.
The Zacks Consensus Estimate for BVH’s current financial-year sales and EPS indicates growth of 8.3% and 20.8%, respectively, from the year-ago period’s reported levels.