Update: About a month has passed since the last Norwegian Cruise Line (NCLH) earnings report. The shares have lost about 82% in that period, underperforming the S&P 500. NCLH stock appears to be in a strong bearish trend. However today we are seeing the stock rocket over 23%!
Will the recent negative trend continue to lead to its next earnings release, or is Norwegian Cruise Line due to a breakout ro continue to breakdown? Before we dive into how investors and analysts have reacted lately, let’s take a quick look at the latest earnings report so we can better manage the critical catalysts.
Is NCLH Stock A Buy?
Several readers have asked us if Norwegian Cruise NCLH stock is a buy. The answer is “Yes,” it is a buy if you want to take a huge risk. However, investors would better off looking at stocks of companies that have a direct risk because of the coronavirus such as cruise line and airline stocks. Update 2/23 – NCLH is bouncing up. Although we told readers this is BUY, please be cautious because most of the upward trend is from the positive news of Congress passing a stimulus bill. There will more than likely be some negative news which will cause NCLH stock to dip. This “dip” may be an excellent time for investors to jump in.
Norwegian Cruise has reported better-than-expected results for the fourth quarter of 2019. The company’s earnings and revenue exceeded the Zacks Consensus Estimate for the fourth consecutive quarter. NCLH was being bought up by hedge funds before coronavirus. The Norwegian Cruise Line Stock (NCLH) is a buy because it is good company, but in a very risky sector right now. We recommend caution, but are adding it to our “Stocks to Watch.”
Adjusted earnings of 73 cents a share beat the Zacks consensus estimate of 70 cents. However, the final result decreased by 14.1% compared to the quarter of the previous year.
Revenue totaled $1,480.6 million in the fourth quarter, breaking the $ 1,431 million consensus mark and improving 7.2% year-over-year. The top line was driven by a 3.4% increase in revenue for passenger passages and a 15.8% increase in revenue on board and others.
Strong spending on board also had a positive impact on revenue for the reported quarter. Additionally, an increase in capacity days with the addition of Norwegian Encore to the fleet led to the top line.
Gross performance (total revenue per capacity day) increased by 4% in the quarter year-over-year. On a constant currency (cc) basis, net performance increased by 1.3% in the reported quarter.
NCLH Operating Expenses
Total operating expenses for cruise ships increased by 8.6% in the quarter under review from the prior-year quarter. The increase can be attributed to the redeployment of Norwegian Joy and the increase in indirect costs due to air promotions.
Gross cruise costs per capacity day increased by 5.6%. Adjusted net cruise costs (excluding fuel) per capacity day increased 4% to cc and 3.4% on a reported basis. Fuel price per metric ton (net of hedges) rose 2.4% to $ 508 in the quarter under review.
Net interest expense was $ 73.2 million in the fourth quarter, down from $68.2 million in the prior-year quarter.
NCLH Balance Sheet
Cash and cash equivalents as of December 31, 2019, amounted to $ 252.9 million, compared to $ 163.9 million as of December 31, 2018. Long-term debt at the end of the fourth quarter totaled $ 6.1 billion, more than $ 5.8 billion at the end of 2018.
Due to the coronavirus outbreak in China, the company has canceled, modified, or redistributed 40 trips, including 24 trips on Norwegian Cruise Line, ten on Oceania Cruises, and six on Regent Seven Seas Cruises. The company stated that it would not have ships deployed in Asia until the end of the third quarter of 2020.
With a majority of businesses shutting down or limited, NCLH stock is expected to continue going down.
Stock Market Today:
S&P futures are lower, down 50 to 51 points, as…
- The Senate failed to pass an anticipated coronavirus stimulus package, forcing additional negotiations in hopes of legislation being passed this week.
- The House of Representatives prepared to advance its own stimulus bill, implying a negotiation between the two chambers could lengthen the process.
- President Donald Trump said the two sides were 95% of the way there on negotiating a rescue package.
- The Federal Reserve’s James Bullard said the unemployment rate could hit 30% in the second quarter due to coronavirus-related shutdowns, stressing the need for government economic support.
European markets fell as…
- Growing uncertainty regarding the severity and duration of coronavirus-related economic damage continued to weigh on investor sentiment.
- Germany, Italy, and Greece tightened restrictions on the movement of individuals, while Spain sought to extend its state of emergency to fight the virus’s spread.
- Group of 20 finance ministers is scheduled to hold a conference call today regarding coronavirus action.
Asian markets declined as…
- The number of worldwide coronavirus cases more than doubled in the past week.
- New Zealand’s central bank said it would begin bond purchases to support domestic economic growth.
- China’s small-cap stocks entered bear-market territory as foreign investors have unloaded $14 billion worth of the country’s shares over the past month.
- India’s Sensex Index saw its worst one-day loss ever as the country went into a virtual lockdown to contain the virus outbreak.
And ahead of…
- Chicago Fed National Activity Index for February (8:30 a.m.)
- Eurozone Preliminary Consumer Confidence Indicator for March (11 a.m.)
Asia – Japan’s Nikkei +2.02%, Japan’s TOPIX +0.68%, China’s Shanghai Composite -3.11%, Hong Kong Hang Seng Index -4.86%, South Korea’s KOSPI -5.34%, Taiwan’s TSE -3.73%
Europe – EuroStoxx 50 -2.96%, UK FTSE -4.28%, German DAX -2.95%, French CAC -2.47%, Italian MIB -3.24%, Spanish IBEX -2.40%
Currencies – Dollar -0.13%, Japanese Yen +0.22%, Euro -0.08%, British Pound -0.41%, Swiss Franc +0.21%, Chinese Yuan -0.32%
WTI Crude -0.84%
Brent Crude -4.45%
Nat Gas -3.62%
US Treasury 10 yr yield -2.6bps at 0.820%
US Treasury 2 yr yield -0.7bps at 0.306%
German 10 yr yield -6.1bps at -0.392%
French 10 yr yield -2.6bps at 0.067%
Italian 10 yr yield +1.1bps at 1.636%
Japanese 10 yr yield -2.6bps at 0.059%
Evidence-based financial writer with 9 years of experience specializing in earnings, economic data coverage, and bond markets. I combine fundamentals, technicals, and macro to identify low-risk, asymmetric opportunities.