NEW YORK (TheStreet) -- Shares of Norwegian Cruise Line (NCLH) were falling 4.7% to $54.62 on heavy trading volume Wednesday after the cruise line priced the 20 million shares sold by selling shareholders in a secondary offering.
Norwegian priced the 20 million ordinary shares in the offering at $54.85 a share. The shares in the offering will be sold by funds affiliated with Apollo Global Management (APO), Star NCLC Holdings, and TPG Global.
The offering is expected to close on May 26. Norwegian will not receive any of the proceeds from the offering, as it is not selling any shares. The total number of outstanding shares of Norwegian will not change as a result of the offering.
About 4.3 million shares of Norwegian Cruise Line were traded by 3:31 p.m. Wednesday, above the company's average trading volume of about 1.4 million shares a day.
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, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 41.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $299.22 million or 31.16% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -16.93%.
- NORWEGIAN CRUISE LINE HLDGS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 increased its bottom line by earning $1.63 versus $0.47 in the prior year. This year, the market expects an improvement in earnings ($2.89 versus $1.63).
- Currently the debt-to-equity ratio of 1.71 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.06, which clearly demonstrates the inability to cover short-term cash needs.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, NORWEGIAN CRUISE LINE HLDGS's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: NCLH Ratings Report