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Does Norwegian Cruise Line Holdings Ltd.'s (NYSE:NCLH) Recent Track Record Look Strong?

Simply Wall St

When Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) released its most recent earnings update (30 June 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Norwegian Cruise Line Holdings's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not NCLH actually performed well. Below is a quick commentary on how I see NCLH has performed.

Check out our latest analysis for Norwegian Cruise Line Holdings

Were NCLH's earnings stronger than its past performances and the industry?

NCLH's trailing twelve-month earnings (from 30 June 2019) of US$983m has jumped 19% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 24%, indicating the rate at which NCLH is growing has slowed down. What could be happening here? Well, let's look at what's transpiring with margins and whether the whole industry is facing the same headwind.

NYSE:NCLH Income Statement, November 4th 2019

In terms of returns from investment, Norwegian Cruise Line Holdings has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 7.8% exceeds the US Hospitality industry of 6.0%, indicating Norwegian Cruise Line Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Norwegian Cruise Line Holdings’s debt level, has increased over the past 3 years from 8.0% to 9.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 129% to 103% over the past 5 years.

What does this mean?

Norwegian Cruise Line Holdings's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Norwegian Cruise Line Holdings to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for NCLH’s future growth? Take a look at our free research report of analyst consensus for NCLH’s outlook.
  2. Financial Health: Are NCLH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.