We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Investors Should Retain Norwegian Cruise (NCLH) Now
Read MoreHide Full Article
Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) is likely to benefit from strong booking activities, digital initiatives and fleet expansion efforts. This and the focus on the Charting the Course initiative bode well. However, geopolitical uncertainties and a rise in dry-dock days are a headwind.
Let us discuss why investors should hold on to the stock for now.
Key Catalysts
NCLH is benefitting from record bookings, successful wave seasons and increased forward-booked positions. This and the focus on continuous innovation and service delivery bode well. As of Mar 31, 2024, the company's advance ticket sales balance reached a record high of $3.8 billion, up around 13% year over year. Robust pricing, capacity growth, a dynamic deployment mix and enhanced pre-sold onboard revenues drove the upside. The company anticipates the momentum to continue on the back of higher pricing and robust yield growth.
Increased focus on digital initiatives bodes well. NCLH created a simplified booking process that employs generative AI technology to personalize the experience for visitors. The initiative paves a path for optimization in pricing and marketing approaches. It is optimistic about the strategies and anticipates it to increase yields, guest satisfaction and guest repeat rates.
The company prioritizes achieving measured capacity growth and optimizing its fleet to bolster financial returns. During the first quarter, the company’s new build pipeline expanded from five to 13 ships, indicating a capacity compound annual growth rate (CAGR) of 6% from 2023 to 2028 and 4% from 2023 to 2036. Historically, such capacity expansion has driven revenues and adjusted EBITDA growth, a trend expected to persist with the integration of larger and more efficient vessels into the fleet. NCLH recently unveiled the commencement of this strategy with the announcement of eight groundbreaking new ships and enhancements to infrastructure on their private island in the Bahamas, Great Stirrup Cay.
The company recently announced a better-than-expected outlook for 2024, courtesy of strong demand and onboard revenue strengths. It unveiled a new comprehensive initiative — Charting the Course — articulating longer-term financial objectives. The program emphasizes financial coordinates, including adjusted operational EBITDA margin, adjusted earnings per share (EPS) and ROIC, with an intent to achieve it by 2026-end. By the end of 2026, the company aims to achieve an Adjusted Operational EBITDA Margin of approximately 39%. The company expects a reduction in net leverage to mid-four turn levels. Adjusted ROIC is expected to be 12%. The company expects adjusted EPS to be $2.45.
Concerns
Image Source: Zacks Investment Research
In the past six months, the stock has declined 4.7% against the industry’s growth of 5.5%. Voyage cancellations and redeployment of itineraries in the Middle East and the Red Sea caused the downside. The company anticipates the headwind to persist for some time.
A rise in dry-dock days is a concern. For second-quarter 2024, the company projects 70 more dry-dock days scheduled compared with the previous year’s figure. The uptick is expected to have a $9 impact or a 550-basis point impact on adjusted net cruise costs, excluding fuel, for the quarter.
Zacks Rank & Stocks to Consider
Norwegian Cruise currently carries a Zacks Rank #3 (Hold).
STRA has a trailing four-quarter earnings surprise of 36.2%, on average. The stock has surged 46.1% in the past year. The Zacks Consensus Estimate for STRA’s 2024 sales and EPS indicates an increase of 6.4% and 33.3%, respectively, from year-ago levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) currently sports a Zacks Rank of 1. RCL has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has rallied 65.2% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS calls for growth of 16.8% and 63.7%, respectively, from year-ago levels.
Hasbro, Inc. (HAS - Free Report) presently flaunts a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 17.5%, on average. The stock has gained 14.6% in the year-to-date period.
The Zacks Consensus Estimate for HAS’ 2025 sales and EPS suggests an improvement of 4% and 14%, respectively, from year-ago levels.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Here's Why Investors Should Retain Norwegian Cruise (NCLH) Now
Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) is likely to benefit from strong booking activities, digital initiatives and fleet expansion efforts. This and the focus on the Charting the Course initiative bode well. However, geopolitical uncertainties and a rise in dry-dock days are a headwind.
Let us discuss why investors should hold on to the stock for now.
Key Catalysts
NCLH is benefitting from record bookings, successful wave seasons and increased forward-booked positions. This and the focus on continuous innovation and service delivery bode well. As of Mar 31, 2024, the company's advance ticket sales balance reached a record high of $3.8 billion, up around 13% year over year. Robust pricing, capacity growth, a dynamic deployment mix and enhanced pre-sold onboard revenues drove the upside. The company anticipates the momentum to continue on the back of higher pricing and robust yield growth.
Increased focus on digital initiatives bodes well. NCLH created a simplified booking process that employs generative AI technology to personalize the experience for visitors. The initiative paves a path for optimization in pricing and marketing approaches. It is optimistic about the strategies and anticipates it to increase yields, guest satisfaction and guest repeat rates.
The company prioritizes achieving measured capacity growth and optimizing its fleet to bolster financial returns. During the first quarter, the company’s new build pipeline expanded from five to 13 ships, indicating a capacity compound annual growth rate (CAGR) of 6% from 2023 to 2028 and 4% from 2023 to 2036. Historically, such capacity expansion has driven revenues and adjusted EBITDA growth, a trend expected to persist with the integration of larger and more efficient vessels into the fleet. NCLH recently unveiled the commencement of this strategy with the announcement of eight groundbreaking new ships and enhancements to infrastructure on their private island in the Bahamas, Great Stirrup Cay.
The company recently announced a better-than-expected outlook for 2024, courtesy of strong demand and onboard revenue strengths. It unveiled a new comprehensive initiative — Charting the Course — articulating longer-term financial objectives. The program emphasizes financial coordinates, including adjusted operational EBITDA margin, adjusted earnings per share (EPS) and ROIC, with an intent to achieve it by 2026-end. By the end of 2026, the company aims to achieve an Adjusted Operational EBITDA Margin of approximately 39%. The company expects a reduction in net leverage to mid-four turn levels. Adjusted ROIC is expected to be 12%. The company expects adjusted EPS to be $2.45.
Concerns
Image Source: Zacks Investment Research
In the past six months, the stock has declined 4.7% against the industry’s growth of 5.5%. Voyage cancellations and redeployment of itineraries in the Middle East and the Red Sea caused the downside. The company anticipates the headwind to persist for some time.
A rise in dry-dock days is a concern. For second-quarter 2024, the company projects 70 more dry-dock days scheduled compared with the previous year’s figure. The uptick is expected to have a $9 impact or a 550-basis point impact on adjusted net cruise costs, excluding fuel, for the quarter.
Zacks Rank & Stocks to Consider
Norwegian Cruise currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector include
Strategic Education, Inc. (STRA - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
STRA has a trailing four-quarter earnings surprise of 36.2%, on average. The stock has surged 46.1% in the past year. The Zacks Consensus Estimate for STRA’s 2024 sales and EPS indicates an increase of 6.4% and 33.3%, respectively, from year-ago levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) currently sports a Zacks Rank of 1. RCL has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has rallied 65.2% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS calls for growth of 16.8% and 63.7%, respectively, from year-ago levels.
Hasbro, Inc. (HAS - Free Report) presently flaunts a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 17.5%, on average. The stock has gained 14.6% in the year-to-date period.
The Zacks Consensus Estimate for HAS’ 2025 sales and EPS suggests an improvement of 4% and 14%, respectively, from year-ago levels.