Norwegian Cruise Line Holdings Ltd.’s (NYSE:NCLH) latest earnings update in December 2018 revealed that the business experienced a strong tailwind, eventuating to a double-digit earnings growth of 26%. Today I want to provide a brief commentary on how market analysts view Norwegian Cruise Line Holdings’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ consensus outlook for this coming year seems rather subdued, with earnings climbing by a single digit 6.5%. The growth outlook in the following year seems much more positive with rates generating double digit 20% compared to today’s earnings, and finally hitting US$1.2b by 2022.
Although it’s informative knowing the growth year by year relative to today’s value, it may be more valuable to determine the rate at which the earnings are moving on average every year. The pro of this technique is that we can get a better picture of the direction of Norwegian Cruise Line Holdings’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 9.4%. This means that, we can assume Norwegian Cruise Line Holdings will grow its earnings by 9.4% every year for the next few years.
For Norwegian Cruise Line Holdings, there are three important factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is NCLH worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether NCLH is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NCLH? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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 firstname.lastname@example.org. 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.