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Norwegian Cruise Line (NCLH) Up 0.2% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

It has been about a month since the last earnings report for Norwegian Cruise Line (NCLH). Shares have added about 0.2% in that time frame, underperforming the S&P 500.

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

Earnings Beat at Norwegian Cruise Line in Q4

The company’s earnings (excluding 15 cents from non-recurring items) of 85 cents per share outpaced the Zacks Consensus Estimate of 79 cents and increased substantially on a year-over-year basis. Higher revenues aided the quarterly results.

Moreover, the cruise operator issued an encouraging view for first-quarter and 2019. For the first quarter, Norwegian Cruise Line expects earnings (excluding special items) of approximately 70 cents per share, above the Zacks Consensus Estimate of 57 cents.

Adjusted earnings for 2019 are anticipated to be in the band of $5.20-$5.30, again above the Zacks Consensus Estimate of $5.15. Both earnings beat and an upbeat guidance pleased investors. Consequently, shares of the company increased in pre-market trading.

Revenues came in at $1,381.2 million, marginally short of the Zacks Consensus Estimate of $1,395.2 million. The top line, however, improved on a year-over-year basis. The year over year improvement was due to the 15% increase in passenger ticket revenues to $958.4 million.

The same from onboard and other sources was up 1.6% on a year-over-year basis to $422.8 million. Gross yield (total revenue per Capacity Day) increased 3% in the quarter on a year-over-year basis.

On a constant currency basis, net yield increased 4.7% in the final quarter of 2018. The measure was up 4.2% on a reported basis. Fuel price per metric ton (net of hedges) increased 7.8% to $496 in the quarter under review.

Total cruise operating expenses were up 8.5% to $817.3 million due to a 7.3% rise in Capacity Days. Also, marketing, general and administrative expenses rose 12.4% year over year to $208.94 million. Gross Cruise Costs (sum of cruise operating expenses and marketing, general and administrative cost) per Capacity Day increased almost 2% in the fourth quarter due to higher marketing, general and administrative expenses.

Fuel price per metric ton, net of hedges, is projected at $456 and $465 for the first quarter and full year 2019, respectively.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 23.25% due to these changes.

VGM Scores

Currently, Norwegian Cruise Line has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, 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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