Norwegian Cruise Line (NCLH) Down 3.4% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Norwegian Cruise Line (NCLH). Shares have lost about 3.4% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Norwegian Cruise Line due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Norwegian Cruise Line's Q3 Earnings & Revenues Top Estimates

The company’s earnings (excluding 16 cents from non-recurring items) of $2.27 per share outpaced the Zacks Consensus Estimate of $2.21. The bottom line also increased 22% on a year-over-year basis. Higher revenues aided the quarterly results.

Revenues came in at $1,858.36 million, which surpassed the Zacks Consensus Estimate of $1,838.3 million and improved 12.5% on a year-over-year basis. The upside was driven by an 11.9% increase in passenger ticket revenues to $1,334.46 million. The same from onboard and other sources was up approximately 14% on a year-over-year basis to $523.9 million. Gross yield (total revenue per Capacity Day) increased 4.5% in the quarter on a year-over-year basis.

Net yield grew 4% on a constant-currency basis. The measure was up 3.9% on a reported basis. Fuel price per metric ton (net of hedges) increased 7.1% to $510 in the quarter under review. Total cruise operating expenses were up 10.8% to $928.94 million due to a 7.6% rise in Capacity Days.

Also, marketing, general and administrative expenses rose 16.4% year over year to $235.44 million. Gross Cruise Costs (sum of cruise operating expenses and marketing, general and administrative cost) per Capacity Day increased 4% in the third quarter due to higher marketing, general and administrative expenses. The company repurchased shares worth more than $450 million in the first nine months of the year.

Q4 & 2018 Guidance

Norwegian Cruise Line expects earnings per share (excluding special items) of approximately 78 cents in the fourth quarter of 2018. For 2018, the company anticipates earnings per share (excluding special items) to be $4.85 (earlier forecast: $4.70-$4.80).

Fuel price per metric ton, net of hedges, is projected at $484 and $480 for the fourth quarter and 2018, respectively.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months.

VGM Scores

At this time, Norwegian Cruise Line has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Norwegian Cruise Line has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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