Why Norwegian Cruise Line Was Riding a Rising Tide This Week

Shares of Norwegian Cruise Line (NCLH 3.69%) were cruising higher this week after the travel and tourism company delivered better-than-expected results in its fourth-quarter earnings report, showing that demand for its cruises remains strong.

Norwegian edged out revenue estimates and offered better-than-expected guidance for 2024, showing that its recovery is expected to continue. As of Thursday’s close, the stock was up 20% for the week, according to data from S&P Global Market Intelligence.

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Norwegian’s recovery continues

This week’s gains at the world’s No. 3 cruise line operator came on Tuesday after it turned in impressive fourth-quarter results.

Revenue in the quarter jumped 31% to $1.99 billion, which was better than estimates at $1.97 billion.

The company said it continued to see “exceptional demand” for the Norwegian Cruise line brand and bookings and pricing are at higher levels for all four quarters of 2024 so far than in 2023 as it entered the new year with its highest all-time bookings and pricing.

Fourth-quarter results were also solid, with revenue per passenger cruise day up 21% from 2019 and overall revenue up 34% from 2019. Yield, the industry term for pricing, was up 8.2% from 2019 levels.

Further down the income statement, the company controlled costs as the adjusted net cruise cost, excluding fuel per capacity day, was $154, down 21% from the year-ago quarter. On the bottom line, it narrowed its per-share loss from $1.04 to $0.18 in a seasonally slow quarter, which was slightly worse than expectations at a loss of $0.14 per share.

CEO Harry Sommer said, “Norwegian Cruise Line Holding experienced a momentous year of growth and achievement in 2023. We successfully took delivery of three new ships, one for each of our brands, representing the most deliveries in a single year in our company’s 57-year history.”

With those new ships, the company now has 31 ships in its fleet across its three brands: Norwegian, Oceania, and Regent Seven Seas Cruises.

What’s next for Norwegian

Looking ahead to 2024, Norwegian’s guidance was also promising, as the company sees net yield rising 5.5% and expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $2.2 billion, up from $1.9 billion in 2023. It also forecast adjusted earnings per share of $1.23, a significant improvement from $0.70 in 2023 and matching analyst estimates. However, its first-quarter guidance of $0.12 in adjusted EPS was much better than estimates of a loss of $0.20 per share, showing that its full-year guidance may be conservative.

It’s clear from Norwegian’s results that the company continues to benefit from the recovery in the cruise industry. As the business recovers and Norwegian’s debt leverage improves, the stock should continue to move higher.