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TheStreet Open House

Why Norwegian Cruise Line (NCLH) Stock Was Lower Today

NEW YORK (TheStreet) -- Shares of Norwegian Cruise Line Holdings  (NCLH) closed down -0.70% to $32.72 after it announced spending $2.18 billion on two new ships from the German shipbuilder, Meyer Weft.

The first ship is scheduled to be delivered in the second quarter of 2018, and the second ship isn't scheduled to arrive until at least the fourth quarter of 2019, at the earliest.

In after-hours trading on Monday, shares are rebounding slightly, up 0.19% to $32.78.

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Separately, TheStreet Ratings team rates NORWEGIAN CRUISE LINE HLDGS as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate NORWEGIAN CRUISE LINE HLDGS (NCLH) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 25.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 153.2% when compared to the same quarter one year prior, rising from -$96.40 million to $51.27 million.
  • NORWEGIAN CRUISE LINE HLDGS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NORWEGIAN CRUISE LINE HLDGS reported lower earnings of $0.47 versus $0.85 in the prior year. This year, the market expects an improvement in earnings ($2.29 versus $0.47).
  • The gross profit margin for NORWEGIAN CRUISE LINE HLDGS is currently lower than what is desirable, coming in at 32.85%. Regardless of NCLH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.72% trails the industry average.
  • The debt-to-equity ratio of 1.39 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.07, which clearly demonstrates the inability to cover short-term cash needs.
  • You can view the full analysis from the report here: NCLH Ratings Report
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