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Norwegian Cruise Rides on Fleet Upgrade & Ticket Revenues

Zacks Equity Research

We recently issued an updated research report on Norwegian Cruise Line Holdings NCLH.

This Zacks Rank #2 (Buy) stock is being aided by a plethora of positives.

Let’s delve into the details.

Norwegian Cruise Line has an impressive earnings surprise history. The cruise operator has outshined the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average beat being 9.8%. We expect the company to perform well with respect to the bottom line in the fourth quarter of 2018 as well. Additionally, the company’s top line is expected to benefit from increased passenger revenues. Detailed results are expected to be revealed next month.

The company's focus on the lucrative Chinese market is highly encouraging. In May 2017, the company announced a partnership with Alibaba Group. By 2020, China’s cruise market is projected to grow to 4.5 million passengers, up from 1 million in 2015, per the data from the Chinese Ministry of Transport. Also, by 2030, China is expected to become the world's second-largest cruise market after the United States. 

Norwegian Cruise Line Holdings Ltd. Price

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

These apart, Norwegian Cruise Line is constantly looking to expand its fleet size, which currently stands at 26, following the launch of Norwegian Bliss in April 2018. In line with its fleet upgrade efforts, the company ordered two next-generation ships in January 2019. They will be delivered between 2022 and 2025. Each ship will accommodate approximately 1,200 guests.

Furthermore, the company has plans to introduce 10 more ships through 2027. Out of the 10, seven are on order for Norwegian Cruise Line, two for Oceania Cruises and one for Regent Seven Seas Cruises. The company will take delivery of its newest ship, Norwegian Encore, in the fall of the current year.

The company’s efforts to reward its shareholders through buybacks are an added positive. In April 2018, the company’s board cleared a three-year program to buy back up to $1 billion worth of its stock.

Other Stocks to Consider

Investors interested in the broader Consumer Discretionary sector may consider the likes of Manchester United MANU, Gray Television GTN and Townsquare Media TSQ, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Manchester United, Gray Television and Townsquare Media have expected EPS growth rates (three to five years) of 21.4%, 10% and 12%, respectively.

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