Norwegian Cruise Line Holdings Ltd. NCLH is scheduled to report fourth-quarter 2024 results on Feb. 27, before the opening bell. In the last reported quarter, the company registered an earnings surprise of 4.2%.

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NCLH’s Estimates Revisions

The Zacks Consensus Estimate for fourth-quarter adjusted earnings is pegged at 11 cents per share, indicating a year-over-year jump of 161.1%. In the past 30 days, earnings estimates for the current quarter have been stable. For revenues, the consensus mark is pegged at $2.09 billion, suggesting a 5.2% year-over-year increase.

What the Zacks Model Unveils

Our proven model doesn't conclusively predict an earnings beat for Norwegian Cruise this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Norwegian Cruise has an Earnings ESP of -1.28%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: The company flaunts a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

What’s Shaping NCLH’s Q4 Results?

Norwegian Cruise’s fourth-quarter performance is likely to have been aided by strong consumer demand and a solid booking environment. Also, the rise in onboard spending, boosted by shore excursions and improved communication offerings via Starlink high-speed Internet, bode well.

Continued strong onboard revenues, especially from shore excursions, specialty dining and onboard amenities, are expected to have significantly contributed to overall revenues. Alongside the aforementioned tailwinds, NCLH’s fleet expansion initiatives and focus on innovation and digital investments are likely to have fostered growth trends.

For the quarter under review, our model predicts passenger ticket revenues and onboard and other revenues to increase 1.9% to $1,359 million and 6.6% to $696.4 million, respectively, on a year-over-year basis. Our model predicts passengers carried in the fourth quarter of 2024 to have increased 13.4% year over year.

The bottom line is expected to have increased year over year on the back of Norwegian Cruise’s continuous focus on cost reductions and efficiencies, accompanied by margin enhancement initiatives. Leverage from top-line growth is expected to have acted as another tailwind. Our model predicts year-over-year adjusted EBITA growth of 27% to $456.7 million.

Despite strong performance expectations, NCLH faces several headwinds that could have negatively impacted its performance. Higher expenses related to commissions, transportation, and onboard services remain a concern. Inflation and global supply chain disruptions are expected to continue pressuring margins. Geopolitical risks also pose operational challenges.

Price Performance & Valuation

NCLH shares have surged 28.8% in the past year, outperforming the Zacks Leisure and Recreation Services industry and the S&P 500. However, the stock has underperformed the other major industry players in the same time frame, with Carnival Corporation & plc CCL rallying 49.2%, Royal Caribbean Cruises Ltd. RCL surging 92.8%, and OneSpaWorld Holdings Limited OSW jumping 35.4%.

Price Performance

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From a valuation perspective, NCLH is trading relatively cheaper. The company has a forward 12-month price-to-earnings of 12.87X, below the industry average.

P/E (F12M)

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Investment Considerations

Norwegian Cruise has shown strong demand, increased onboard spending, and solid revenue growth driven by fleet expansion and digital investments. The company’s focus on cost efficiencies and margin improvements supports a positive long-term outlook. However, persistent challenges like higher expenses, inflationary pressures, and geopolitical risks could weigh on profitability. While NCLH’s valuation remains attractive compared to industry peers, its stock has underperformed major competitors, suggesting limited near-term upside. Existing investors may benefit from holding the stock to capitalize on ongoing recovery trends, but new investors should wait for a more favorable entry point, considering the external risks and competitive pressures.

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Carnival Corporation (CCL) : Free Stock Analysis Report

Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report

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OneSpaWorld Holdings Limited (OSW) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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