Shares of Norwegian Cruise Line Holdings Ltd. NCLH have rallied 75.7% in the past six months, outperforming the Zacks Leisure and Recreation Services industry’s growth of 14%.

The company’s impressive third-quarter 2024 results anchored by resilient demand, elevated onboard offerings and targeted growth strategies have positioned it ahead of competitors. In the same time frame, stocks like Carnival Corporation & plc CCL, Royal Caribbean Cruises Ltd. RCL and OneSpaWorld Holdings Limited OSW have gained 69%, 66.8% and 30.9%, respectively.

NCLH Price Performance

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But, with such a strong run, is now the right time to buy in? Let’s explore what’s fueling NCLH’s momentum and whether it’s time to add this stock to your portfolio.

Riding High: What’s Driving NCLH's Growth?

NCLH’s success has been powered by strong quarterly performance fueled by resilient consumer demand and enhanced onboard offerings. Investors are taking notice of this steady upward trajectory, especially as the company continues to outperform on key metrics while maintaining cost efficiency. In fact, Norwegian’s “Charting the Course” strategy — which focuses on people, products, growth platforms, and performance — appears to be keeping the company on track for sustained success. The cruise line operator exceeded its guidance across all key metrics for the third straight quarter, resulting in an increase in its full-year guidance for the fourth time this year.

In the third quarter of 2024, NCLH achieved its highest quarterly revenue and adjusted EBITDA in history. Earnings per share climbed 31% year over year, reaching 99 cents, outpacing guidance even after a small hit from foreign exchange fluctuations. Norwegian Cruise also made strides with its net leverage ratio, down to 5.58 from 2023’s year-end levels, indicating strong financial stability. The company expects its adjusted EBITDA margin to reach 35.3% in 2024, with a goal of hitting 39% by 2026.

The Demand Surge Keeps NCLH Sailing Smooth

Strong demand has continued to drive NCLH’s bookings and pricing, with net yield growing 9% year over year in the third quarter of 2024. The increase has been primarily fueled by solid demand across all geographies, particularly in Alaska, Canada and New England. Norwegian Cruise also reported a significant rise in onboard revenues, boosted by shore excursions and improved communication offerings via Starlink high-speed Internet. The company reported strong bookings for 2025, with pricing and occupancy rates in line with or above current levels. Advanced ticket sales have also increased 6% year over year, outpacing capacity growth and reflecting the strong consumer confidence in cruising as a desirable vacation option.

Partnerships and Branding Boost NCLH’s Market Appeal

NCLH’s partnership and brand-building initiatives further strengthen its appeal. The company recently launched the "Experience More at Sea" positioning for its Norwegian Cruise Line brand, which adds value through upgraded onboard amenities and exclusive partnerships. The positioning is complemented by a new partnership with the National Hockey League, which connects the company with hockey fans and expands its visibility within the sports community. Oceania Cruises also enhanced its brand promise, offering guests additional inclusions, such as gourmet dining, prepaid gratuities, and Starlink WiFi. These brand upgrades reflect NCLH’s focus on delivering superior experiences that align with evolving consumer preferences.

NCLH’s Fleet Expansion to Drive Long-Term Growth

A significant aspect of NCLH’s growth plan is its expanding fleet. Norwegian Luna, a new ship equipped with high-end amenities, is set to join the fleet in 2026. Other brands under NCLH’s umbrella, such as Oceania and Regent Seven Seas, are also set to launch new vessels, each aiming to provide an exceptional experience. This continuous growth in capacity reflects the company’s commitment to staying ahead of the curve in the cruise market.

NCLH Earnings Estimates Show Upward Movement

NCLH expects its 2024 earnings per share (EPS) to be nearly $1.65, up from the prior expectation of about $1.53. The Zacks Consensus Estimate for NCLH’s 2024 and 2025 EPS has moved up 1.9% and 3.7%, respectively, in the past 60 days. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.

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Attractive Valuation and High Returns Make NCLH Appealing

NCLH has shown impressive profitability, with a trailing 12-month return on equity of 113.7%, significantly higher than the industry average of 25.2%. This metric suggests that the company is efficiently using shareholders’ funds to generate returns, which can be a positive sign for long-term investors.

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Additionally, NCLH trades at a forward 12-month price-to-earnings ratio of 14.67X, below the industry average of 21.26X, presenting a potentially attractive valuation for investors.

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Technical Indicators Point to Potential Upside

From a technical perspective, NCLH's stock performance is showing upward momentum, with shares currently trading above both their 50-day and 200-day moving averages. This trend indicates that the stock has established strong support levels, suggesting potential resilience and further upside in the near term.

NCLH Stock Trades Above 50 and 200-Day Moving Average

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Conclusion

Norwegian Cruise presents a compelling investment opportunity, driven by its impressive operational performance, strategic partnerships, and expanding fleet. The company’s strong booking volumes, improved net yield, and substantial return on equity underscore its capacity to capitalize on rising demand in the travel and leisure sector. With a favorable valuation relative to its industry peers and upwardly revised earnings projections, NCLH is well-positioned to deliver sustained growth and enhance shareholder value. We believe that this Zacks Rank #2 (Buy) stock is an ideal candidate for investors’ portfolio addition.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Carnival Corporation (CCL) : Free Stock Analysis Report

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