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Norwegian Cruise (NCLH) Stock Loses 6% on Monday: Here's Why

Zacks Equity Research
Updated

Shares of Norwegian Cruise Line Holdings Ltd. NCLH fell 6.1% to $48.77 at the close of business on Jun 25, thus slipping to a 52-Week low of $47.33. Moreover the stock has declined 9.9% in a month against the industry’s 3.8% rise.



 

What Caused the Downfall

Norwegian Cruise stock decreased yesterday, primarily due to its competitor Carnival Corporation’s CCL announcement of a dismal forecast. The company’s trimmed full-year earnings outlook (mainly due to rising fuel costs and currency-related headwinds) also induced a drop in the share price of another rival, Royal Caribbean Cruises Ltd. RCL.

It is important to note that the cruise industry has been grappling with unfavorable demand-supply conditions and Norwegian Cruise is no exception. Per CNBC reports, high industry supply, slackening yield growth and weakness in the Caribbean and China are causes for concern in the industry.

Rising fuel prices are another headwind for the company as well as the entire industry. With fuel prices shooting up, such costs are anticipated to hurt the company’s bottom line in the second quarter of 2018. Notably, high costs have been affecting the company since the past few quarters. Total cruise operating expenses were up 7.5% in 2017. Moreover, the same rose 6.7% in the first quarter of 2018.
 
Zacks Rank & A Key Pick

Norwegian Cruise carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Lindblad Expeditions Holdings Inc. LIND, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Lindblad Expeditions have surged more than 33% in the last six months.

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Carnival Corporation (CCL) : Free Stock Analysis Report
 
Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
 
Norwegian Cruise Line Holdings Ltd. (NCLH) : Free Stock Analysis Report
 
Lindblad Expeditions Holdings Inc. (LIND) : Free Stock Analysis Report
 
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