Why Is Norwegian Cruise Line (NCLH) Down 8% Since its Last Earnings Report?

It has been about a month since the last earnings report for Norwegian Cruise Line Holdings Ltd. NCLH. Shares have lost about 8% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is NCLH 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.

Fourth quarter Earnings

The company’s earnings (excluding 25 cents from non-recurring items) came in at 68 cents per share, up 21.4% on a year-over-year basis. Revenues of $1,249.6 million, fell short of the Zacks Consensus Estimate of $1,251.7 million. However, the top line improved 11.1% on a year-over-year basis. The increase was aided by a 9.9% increase in passenger ticket revenues to $833.3 million. The same from onboard and other sources was up 13.5% on a year-over-year basis to $416.3 million. Gross yield increased 2.5% in the quarter on a year-over-year basis.

Adjusted net yield grew 3.4% on a constant currency basis. The measure was up 3.9% on a reported basis. Fuel price per metric ton increased marginally to $460. Total cruise operating expenses were up 8.4% to $753.4 million backed by rise in fuel costs, among other factors.

Moreover, marketing, general and administrative expenses increased significantly to $185.8 million.  Gross Cruise Costs (sum of cruise operating expense and marketing, general and administrative cost) per Capacity Day increased 1.2% in the final quarter of 2017.

Outlook

Norwegian Cruise Line expects earnings per share (excluding special items) of approximately 52 cents in the first quarter of 2018. For full-year 2018, the company anticipates earnings (excluding special items) in the band of $4.45 to $4.65.  Fuel price per metric ton, net of hedges, is projected at $450 and $465 for first-quarter and full-year 2018, respectively.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been six revisions higher for the current quarter.

Norwegian Cruise Line Holdings Ltd. Price and Consensus

 

Norwegian Cruise Line Holdings Ltd. Price and Consensus | Norwegian Cruise Line Holdings Ltd. Quote

VGM Scores

At this time, NCLH has an average Growth Score of C, however its Momentum is doing a lot better with an A. The stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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

Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for value and to a lesser degree growth.

Outlook

Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. Notably, NCLH has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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