Yahoo Finance Norwegian Cruise (NCLH) '24 View up on Strong Demand, Stock Up
Norwegian Cruise Line Holdings Ltd. NCLH recently announced a better-than-expected outlook for 2024, courtesy of strong demand and solid bookings. Also, it unveiled a new comprehensive initiative — Charting the Course — articulating longer-term financial objectives. The program emphasizes financial coordinates, including adjusted operational EBITDA margin, adjusted earnings per share (EPS) and ROIC, with an intent to achieve it by 2026-end. Following the announcements, the company’s shares moved up 7.6% during trading hours on May 21.
Strong 2024 Outlook
For 2024, the company anticipates occupancy to be approximately 105.1% and Capacity Days to be about 23.5 million. During the year, adjusted interest expenses are expected at approximately $740 million. Depreciation and amortization are anticipated at nearly $895 million.
Net Yield growth in 2024 is projected at 7.2% year over year, up from the prior expectation of 6.4%. Adjusted EBITDA during the year is projected to be nearly $2.3 billion, up from the previous expectation of nearly $2.25 billion. For 2024, adjusted EPS are currently expected to be about $1.42, up from the prior expectations of about $1.32.
Charting the Course Strategy
The company initiated a new course with a transformational strategy to drive growth. The initiative focuses on reshaping the company’s culture (People Excellence), investing in offerings that guests value (Guest-centric Product), leveraging high-growth opportunities (Long-term Growth Platform) and enhancing financial performance through operational excellence underpinned by the Sail & Sustain sustainability strategy (Exceptional Performance).
NCLH revealed the commencement of the strategy with the recent announcements of eight new transformative ships and infrastructure improvements to their private island in the Bahamas, Great Stirrup Cay.
By the end of 2026, the company aims to achieve an Adjusted Operational EBITDA Margin of approximately 39%. The company expects a reduction in net leverage to mid-four turn levels. Adjusted ROIC is expected to be 12%. The company expects Adjusted EPS at $2.45.
Price Performance
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The stock has gained 18.2% in the past year compared with the industry's 16% growth. The company has been benefiting from higher demand and pricing, digital initiatives and fleet expansion efforts. This and strength in pre-cruise packages bode well.
During the first quarter of 2024, NCLH reported impressive onboard revenues, with pre-cruise purchases increasing 16% year over year. This highlights the company's capacity to accommodate significant demand from pre-cruise purchases, resulting in increased overall spending during guests' cruise experiences. As of Mar 31, 2024, the company's advance ticket sales balance reached $3.8 billion, up around 13% year over year.
The company is optimistic about its strong booking position for the next 12 months, characterized by increased pricing and robust yield growth. Earnings estimates for 2024 have increased 5.6% in the past 30 days to $1.33 per share. This indicates optimism regarding the stock’s growth potential.
Zacks Rank & Key Picks
Norwegian Cruise currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are:
Strategic Education, Inc. STRA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
STRA has a trailing four-quarter earnings surprise of 36.2%, on average. The stock has surged 48.9% in the past year. The Zacks Consensus Estimate for STRA’s 2024 sales and EPS indicates an increase of 6.4% and 33.3%, respectively, from the year-ago levels.
Royal Caribbean Cruises Ltd. RCL currently sports a Zacks Rank of 1. RCL has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has rallied 83.9% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS calls for growth of 16.6% and 61.9%, respectively, from the year-ago levels.
Hasbro, Inc. HAS presently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 17.5%, on average. The stock has gained 21.6% in the year-to-date period.
The Zacks Consensus Estimate for HAS’ 2025 sales and EPS suggests an improvement of 4% and 14.4 %, respectively, from the year-ago levels.
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Norwegian Cruise Line Holdings Ltd. (NCLH) : Free Stock Analysis Report
