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Factors to Aid Norwegian Cruise Line (NCLH) in Q1 Earnings

Zacks Equity Research

Norwegian Cruise Line Holdings Ltd. NCLH is expected to have seen solid top- and bottom-line growth in the first quarter of 2019. In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 7.6%. The bottom line also outpaced the consensus mark by 9.7% in each of the trailing four quarters.

Q1 Expectations

The Zacks Consensus Estimate for first-quarter earnings is pegged at 71 cents, indicating an 18.3% rise from the year-ago quarter number. Of late, the company’s earnings estimates have been stable. For quarterly revenues, the consensus mark is pinned at nearly $1.39 billion, suggesting growth of 7.5% from the prior-year quarter figure.
    
Let us delve deeper into factors that are likely to influence Norwegian Cruise Line’s first-quarter results.

Factors at Play

Norwegian Cruise Line's results in the first quarter are likely to be driven by higher passenger ticket revenues owing to increased demand for cruise travel. Its focus on the lucrative Chinese market is an added positive. Norwegian Cruise Line’s measures to expand its fleet size too bode well. Additionally, Norwegian Cruise Line is making efforts to reward its shareholders through buybacks.

However, high cruise operating expenses are limiting the company’s bottom-line growth. As an evidence, cruise operating expenses were up 10.5% to $3.38 billion in 2018. Moreover, as Norwegian Cruise Line operates globally, it is exposed to foreign-exchange related risks.

Norwegian Cruise Line Holdings Ltd. Price and EPS Surprise

Norwegian Cruise Line Holdings Ltd. Price and EPS Surprise | Norwegian Cruise Line Holdings Ltd. Quote

What Does Our Model Say?

According to our quantitative model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a fair chance of beating estimates. Meanwhile, stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Norwegian Cruise Line has an Earnings ESP of +0.53% and a Zacks Rank #3, a combination that increases the odds of an earnings beat.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are some stocks from the Consumer Discretionary sector that investors may consider as our model shows that these too have the right combination of elements to report an earnings beat in the to-be-reported quarter:

Hyatt Hotels Corporation H has an Earnings ESP of +5.32% and a Zacks Rank #3. The company is scheduled to report quarterly numbers on May 1.

SeaWorld SEAS has an Earnings ESP of +16.13% and a Zacks Rank #1. The company is scheduled to report quarterly numbers on May 7.

PlayAGS, Inc. AGS has an Earnings ESP of +22.22% and a Zacks Rank #2.

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