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Norwegian Cruise (NCLH) Gains 18% in Past 6 Months: Here's How

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Shares of Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) have gained 18.4% in the past six months compared with the industry’s increase of 2.6%. The company is benefiting from improving occupancy, fleet-expansion efforts and relaxation in COVID-related protocols.

The Zacks Rank #2 (Buy) company’s sales and earnings in 2023 is likely to witness growth of 73.8% and 121.1%, respectively, from the year-ago estimated levels.

Let’s delve deeper to find out the factors that make Norwegian Cruise an attractive pick.

Growth Drivers

Improving occupancy continues to aid the company’s performance. In third-quarter 2022, occupancy was approximately 82%, in line with the company’s expectations. In the previous quarter, the company had reported occupancy of 65%.

For the fourth quarter of 2022, the company expects occupancy to be in the mid-to-high 80% range. Although seasonality-induced headwinds are likely to persist in the fourth quarter, the company anticipates sequential improvements in load factor, with sequential gap reduction (of about 20%) from 2019 levels.

The company anticipates occupancy ramp-up to continue and reach historical levels (of 100% plus) during the second quarter of 2023. Most of the countries in the EU are now allowing travelers from the United States.

Zacks Investment Research
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As of Sep 30, 2022, the company reported advance ticket sales of $2.5 billion, including the long-term portion, which included approximately $258 million of future cruise credits. Going forward, the company intends to focus on strategic marketing efforts to drive demand and high-value bookings in the upcoming periods.

Although the cumulative booked position for the fourth quarter of 2022 is below the comparable 2019 levels, the company stated that booking trends for 2023 remain in line with the record of 2019. Pricing is also very high for 2023.

On the other hand, Norwegian Cruise is constantly looking to expand fleet size, which is currently at 29. 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 the project Leonardo, Norwegian Cruise will have an additional six ships with expected delivery dates from 2022 through 2027.

In 2023, the company anticipates the additions of Norwegian Viva, Oceania Cruises Vista and Regent Seven Seas Grandeur to its fleet.

Other Key Picks

Other top-ranked stocks in the Zacks Consumer Discretionary sector are World Wrestling Entertainment, Inc. (WWE - Free Report) , OneSpaWorld Holdings Limited. (OSW - Free Report) and Manchester United plc (MANU - Free Report) .

World Wrestling Entertainment currently sports a Zacks Rank #1 (Strong Buy). WWE has a trailing four-quarter earnings surprise of 25.2%, on average. The stock has increased 75.9% in the past year.  You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for WWE’s 2023 sales and earnings per share (EPS) indicates a rise of 4.9% and 10.7%, respectively, from the year-ago period’s estimated levels.  

OneSpaWorld presenttly sports a Zacks Rank #1. OSW has a trailing four-quarter earnings surprise of 84.1%, on average. Shares of OSW have increased 5.7% in the past year.  

The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 24.2% and 91%, respectively, from the year-ago period’s levels.

Manchester sports a Zacks Rank #1, at present. MANU has a trailing four-quarter earnings surprise of 34.4%, on average. Shares of MANU have gained 67.2% in the past year.  

The Zacks Consensus Estimate for MANU’s 2024 sales and EPS indicates a rise of 11.4% and 27.8%, respectively, from the 2023 levels. 

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