NCL stock down on mixed earnings results.

currently $36.85/share

new 52week low?

 

tempting to buy some to get $100 obc for oct cruise

I've never been tempted to try to catch a falling knife.

Good luck.

I've never been tempted to try to catch a falling knife.

Good luck.

Yeah, you get better odds investing in future cruise certificates on board.

Yeah, you get better odds investing in future cruise certificates on board.

cant u do both?

use that $100 obc from stock to buy fcc to fund your next ncl trip? :p

NCLH is down again this morning.

NCLH - Norwegian Cruise Line Holdings Ltd (NASDAQ)

36.44 -0.42 (1.14%)

Aug 25, 10:22 AM EDT - Disclaimer

+ ()

Open: 36.68

High: 36.75

Low: 36.32

Volume: 180,031

Avg Vol: 2,561,522

Mkt Cap: 8.10B

Wow. It's dropping a lot more than its peers yet no new news on the company's rating changing.

This article from two weeks ago is eye opening: http://www.cnbc.com/2016/08/09/norwegian-cruise-line-shares-stumble-on-lowered-guidance.html

Frank Del Rio, president and CEO of Norwegian, cited four main reasons for revising its guidance, including "continued weak demand from our core North American consumer for European sailings at a time when half of our fleet is deployed in the region, including eight of our highest yielding ships."

Gee, I wonder why demand has dropped off over the last few years? :rolleyes:

Wow. It's dropping a lot more than its peers yet no new news on the company's rating changing.

 

This article from two weeks ago is eye opening: http://www.cnbc.com/2016/08/09/norwegian-cruise-line-shares-stumble-on-lowered-guidance.html

 

 

 

Gee, I wonder why demand has dropped off over the last few years? :rolleyes:

My number one guess on why North Americans aren't taking as many European cruises is because of all the recent terrorist incidents. It's not just cruises that are slumping but land vacations in Europe also.

Wow. It's dropping a lot more than its peers yet no new news on the company's rating changing.

 

This article from two weeks ago is eye opening: http://www.cnbc.com/2016/08/09/norwegian-cruise-line-shares-stumble-on-lowered-guidance.html

 

 

 

Gee, I wonder why demand has dropped off over the last few years? :rolleyes:

You are making quite an assumption with your comment about demand having dropped of over the last few years, because it hasn't.

If you look at the SEC filings, the occupancy rate is the last quarter was down slightly compared to last year (106.7% compared to 107% if I remember correctly). However, the overall capacity has risen during that same period. So overall number of passenger days are up. So basically not all of their new capacity has been absorbed to the same level as previously. Not unexpected when you look at the large amounts of capacity coming on board.

NCLH trades at a similar P/E ratio as CCL. All three of the cruise line companies are down compared to the start of the year, but still up significantly compared to 3 years ago. Both RCL and NCLH have significant debt due to their relatively large increases in capacity (new ships means large capital investment).

The primary difference in tracking the stock price between the 3 lines is that NCLH basically launched an IPO 3 years ago. The stock rose fairly steadily to 63.62 almost 2.5 times the ipo price of 24.79 reaching the peak at the end of October 2015. Since then it has been retracing and is returning to where its fundamentals indicate it should be. Current market cap is 8.1 billion with a P/E ratio of 16.45.

RCL on the other hand was around 38.42 at the start of 2013. It also rise to a peak of 101.21 at the end of December 2015 (peaking 1 quarter after NCLH), but it also has retraced down to 71.02. However it is still trading at a higher then expected P/E of 20.33 and has a market cap of 15.15B. Note that if the P/E for RCL were to drop to that of its competition it would be trading at 57.29 (a drop similar to that of NCLH has experienced as its P/E dropped back). The question for the next quarter or two will be if RCL can continue to command its P/E premium.

Both RCL and NCLH have been buying new ships and expanding capacity more quickly then their primary competition CCL. Thus both have commanded a higher, more growth based P/E multiple, but have seen their P/E drop this year.

CCL on the other hand is the largest in both market cap and passenger capacity, and is adding capacity at the slowest rate. Correspondingly it carries by far the least debt. CCL was at 37.03 at the start of 2013 and peaked at 54.48 at the end of December 2015. It has since retraced down to 47.17. CCL grew less as a percentage then either RCL or NCLH, but has dropped less as a percentage then either as well. Probably because it has less growth focused and is more stable as a business then either of the others. CCL's P/R ratio is 16.3 and has a market cap of 34.8 billion.

So yea NCLH is down a bit, but so are the others. Its occupancy rate is down very slightly with new capacity having come on line, but over all passenger count is up. Counter to what is being implied the stock is about where it should be and does not represent and sign of a failing business. Note I currently hold shares of CCL and have held RCL in the past (sold my RCL during Q4 of 2015), but have not held shares of NCLH.

Several unmentioned factors come into play that affect NCLH stock price.

Price increases affect the booking numbers, and due to the increase in capacity it is imperative that the booking numbers increase proportionately.

The fact that some institutional investors are reducing their exposure also is important.

That coupled with the fact that stock sales are somewhat hampered by NCLH lack of dividend payments.

NCLH instituted a stock buyback rpogram that boosted the stock price.

NCL management ideas to generate more revenue from guests could be a major factor in the lack of increased bookings and the increase in cancellations.

Some of these items will not show up in the statistics, but the fact that NCLH stock was about five dollars per share above Carnival a few months ago and is now more than ten dollars a share below Carnival cause one to question why the rather abrupt change.

Zika has to be having some effect, I would think?

Bargain hunters eyeing this & similar stocks as "investment" - might want to hold off ... closing almost at a new 52 weeks low again, just now.

Interesting read from Citi - link -

Zachs Research has lowered NCLH's 1 year price target to $50.25, quietly following several others within the last 2 weeks - lowered expectations seemed to be "in" the pipeline.

http://www.kentuckypostnews.com/the-consensus-weighing-in-on-norwegian-cruise-line-holdings-ltd-nasdaqnclh-2/81457/

http://www.fiscalstandard.com/2016/08/19/new-broker-views-on-norwegian-cruise-line-holdings-ltd-nasdaqnclh/

Whether it's Zika or global threat on terror, or something else - those events are well beyond the reach & influence of NCLH. Another direct NCL email this afternoon about last minute Sail Away Rate for the Escape & Getaway, plus, Mexico ... Maybe, they do need to fill the staterooms and discount (just like the competition); and, worry about onboard spending, despite the "free" giveaways.

It looks like MSC is still undercutting NCL on their Caribbean prices for Sept bookings.

Maybe the people who can book the caribbean cruises on short notice may get some pretty good deals.

You have to admit the marketing from the Facebook page to television ads is pretty awful as well.

Sent from my iPhone using Tapatalk

NCLH is performing much worse than RCCL and CCL, external factors aren't the only things at play, Del Rio and Stuart are awful executives and are ruining the brand. Anyone who can't see this is burying their head in the sand.

NCLH is performing much worse than RCCL and CCL, external factors aren't the only things at play, Del Rio and Stuart are awful executives and are ruining the brand. Anyone who can't see this is burying their head in the sand.

It's hard to root for these guys. :eek:

NCLH is performing much worse than RCCL and CCL, external factors aren't the only things at play, Del Rio and Stuart are awful executives and are ruining the brand. Anyone who can't see this is burying their head in the sand.

As far as company performance the following comparison is from the most recent quarter. As far as ruining the brand it is not showing up in the most recent quarterly numbers. They may be losing some customers, but they appear to be replacing them just fine.

NCLH

income per share .64

Revenue Percentage Tickets 69%

Revenue Percentage Onboard 31%

Net Income % of revenue 12.2%

Occupancy percentage 106.6%

Revenue per passenger day $280.11

RCL

income per share 1.09

Revenue Percentage Tickets 72%

Revenue Percentage Onboard 28%

Net Income % of revenue 10.9%

Occupancy percentage 104.6%

Revenue per passenger day $210.9

CCL

income per share .81

Revenue Percentage Tickets 73%

Revenue Percentage Onboard 27%

Net Income % of revenue 16.3%

Occupancy percentage 104.1%

Revenue per passenger day $180.73

While the stock has dropped the most recently, it is mostly a drop in P/E multiple (it had the highest multiple during the run up over the last three years and has now dropped back to be on par with Carnival). The change that one would expect when the momentum trade comes off.

What is surprising is that it has a P/E similar to CCL even though NCLH does not pay a dividend and CCL does. That normally gives the dividend paying company more of a premium P/E ration.

As far as key fundamentals NCLH has the highest occupancy rate, the highest revenue per passenger day of the three. Its net income is better then RCL, though not as good as CCL (CCL has significant advantages in that it is spending a much lower percentage in capital investment in new ships than is NCLH or RCL. As such less debt and debt payments).

As far as company performance the following comparison is from the most recent quarter. As far as ruining the brand it is not showing up in the most recent quarterly numbers. They may be losing some customers, but they appear to be replacing them just fine.

 

NCLH

 

income per share .64

Revenue Percentage Tickets 69%

Revenue Percentage Onboard 31%

Net Income % of revenue 12.2%

Occupancy percentage 106.6%

Revenue per passenger day $280.11

 

RCL

income per share 1.09

Revenue Percentage Tickets 72%

Revenue Percentage Onboard 28%

Net Income % of revenue 10.9%

Occupancy percentage 104.6%

Revenue per passenger day $210.9

 

CCL

income per share .81

Revenue Percentage Tickets 73%

Revenue Percentage Onboard 27%

Net Income % of revenue 16.3%

Occupancy percentage 104.1%

Revenue per passenger day $180.73

 

While the stock has dropped the most recently, it is mostly a drop in P/E multiple (it had the highest multiple during the run up over the last three years and has now dropped back to be on par with Carnival). The change that one would expect when the momentum trade comes off.

 

What is surprising is that it has a P/E similar to CCL even though NCLH does not pay a dividend and CCL does. That normally gives the dividend paying company more of a premium P/E ration.

 

As far as key fundamentals NCLH has the highest occupancy rate, the highest revenue per passenger day of the three. Its net income is better then RCL, though not as good as CCL (CCL has significant advantages in that it is spending a much lower percentage in capital investment in new ships than is NCLH or RCL. As such less debt and debt payments).

The stock has lost nearly half its value from the O'Sheehan days and they're missing earnings targets. It is not the picture of a rosy and successful company. If this was just a small or just a recent stock price drop that would be one thing, but it's been steadily going down for months. And with bookings so far down its false to claim that lost customers are being replaced by new ones.

The stock has lost nearly half its value from the O'Sheehan days and they're missing earnings targets. It is not the picture of a rosy and successful company. If this was just a small or just a recent stock price drop that would be one thing, but it's been steadily going down for months. And with bookings so far down its false to claim that lost customers are being replaced by new ones.

NCLH had its IPO 3 years ago. As I pointed out earlier since the IPO the stock price ran up 2.5 times from the IPO price peaking at the end of September 2015. The other cruise lines also ran up during the same time. Both CCL and RCL peaked during Dec 2015. RCL ran up a similar amount to NCLH during the 3 year period (2.6 times) and has dropped down about 30% compared to NCLH's drop of about 50%. RCL still commands more of a premium compared to earnings (higher P/E ratio).

CCL did not climb as far as the other 2, but also had not dropped as much as either. Bottom line is that both RCL and NCLH commanded a growth premium and that premium has been reduced in the case of RCL and has gone away in the case of NCLH. Even with that the fundamentals of NCLH is still strong and in many categories better then RCL.

Sheehan left Jan 9, 2015. The stock was at $45.20. The stock proceeded to climb to $63.62 peaking at the end of September. It is now at $36.18. So it has not not dropped 50% from the Sheehan days. It has dropped 20% since then.

Stock prices are rather fickle things. Often driven more by opinions then by company fundamentals. Also stocks tend to look one year out. Analysts as projecting higher fuel costs and interest rates. All three cruise line stocks have been impacted by world events such as Zika and the terrorism issues in Europe. One reason why one might be impacted more then another is due to concentration of revenue by geographic area. NCLH might be expected to be impacted by Zika more then RCL and CCL because of demographics. NCLH has a younger client base (more in the child bearing age range) that would tend to be more concerned with Zika.

cant u do both?

use that $100 obc from stock to buy fcc to fund your next ncl trip? :p

Yes, you can . . . and, yes, I have. :)

.

Zika has to be having some effect, I would think?

I cannot speak for NCL (I've no clue), but for at least one cruise line that is closely monitoring the current and future passenger feedback concerning this subject, the negative impact has been surprisingly minimal.

And although it should be done anyway, there is a directive to keep an eye on any locations that can collect standing water.

.

The stock has lost nearly half its value from the O'Sheehan days and they're missing earnings targets. It is not the picture of a rosy and successful company. If this was just a small or just a recent stock price drop that would be one thing, but it's been steadily going down for months. And with bookings so far down its false to claim that lost customers are being replaced by new ones.

Not sure where you are getting that bookings are so far down, because the numbers I gave of 106.6 occupancy rate is from the most recent quarter, the result that was mentioned as being the weaker bookings number quarter. Yes they are weaker the occupancy rate was 106.6% instead of 108.7% the previous year. Keeping in mind that capacity increased during that period so the actual number of passenger increased from 3,948,773 in Q2 2015 to 4,237,020 in 2016. The numbers were soft in that if they had hit the same occupancy rate as a year earlier they would have reach 4,320,289. So their softness is that their days only increased by 288,247 instead of 371,516. At the average revenue per day for the period that would have been an additional 10.4 million in revenue.

Not sure what you are using to claim that "bookings are so far down", but the filings certainly do not reflect it. Bottom line is that bookings are not down, only that they did not increase as much as expected.

Perhaps Europeans are less forgiving of the constant changes and price hikes and are taking their Euros/Pounds elsewhere.

Got it in one

Looks like the continual squeezing of customers is having an impact on the bottom line......and not in a good way. I think there is a list somewhere of about 20 changes over the past year or so, all of which go towards the target of another $50 of revenue per person. Listen NCL, your customer-unfriendly strategy isn't working. You are the Ryanair of the Seas......actually Ryanair mended their ways recently.

 

As far as the UK customer is concerned, given a choice of cruiselines with similar ships and similar destinations (Med/Baltic etc), why would they fly to Venice Rome or Barcelona when they can drive or get the train to Southampton.

 

Finally, again for UK bookings, NCL have trashed the last minute booking market by only offering Free at Sea for bookings make more than a month or two in advance. Great idea in theory, unless you're sailing half empty, in which case recognise it's not worked and change tack.

What a great post love the analogy and sail from the UK you arte so correct. Indy is full!

Surprised people are shocked at NCLH's financials and how FDR has handled everything. All one has to do is research Renaissance Cruises, to get an idea of what happens when FDR goes unchecked. Granted Renaissance had numerous problems, but a fair share of them were direct result of policies and practices that FDR put in place. I have no idea what FDR has promised Apollo, but they seem to love the man despite his shortcomings.

Whats even more shocking to me is the willingness of Andy Stuart to go along with FDR's horrendous decisions. Stuart is generally credited to be the brains behind many of NCL's innovations, one would think he would strive to protect everything he had help build. Just makes me wonder how much clout, control, and decision making he truly has.

Not sure where you are getting that bookings are so far down, because the numbers I gave of 106.6 occupancy rate is from the most recent quarter, the result that was mentioned as being the weaker bookings number quarter. Yes they are weaker the occupancy rate was 106.6% instead of 108.7% the previous year. Keeping in mind that capacity increased during that period so the actual number of passenger increased from 3,948,773 in Q2 2015 to 4,237,020 in 2016. The numbers were soft in that if they had hit the same occupancy rate as a year earlier they would have reach 4,320,289. So their softness is that their days only increased by 288,247 instead of 371,516. At the average revenue per day for the period that would have been an additional 10.4 million in revenue.

 

Not sure what you are using to claim that "bookings are so far down", but the filings certainly do not reflect it. Bottom line is that bookings are not down, only that they did not increase as much as expected.

First -- A CPA (Del Rio) can distort the numbers to make them look good.

The booking numbers may be up, but it is obvious that NCL is chopping prices and adding "giveaways" to keep the numbers up, and it appears that they will need to continue doing this.

The tricks such as adding "service charges" are not setting very well with some people and that leads to word of mouth adverse publicity. Those tactics work for a while, but eventually they may come back to bite the company that does it.

First -- A CPA (Del Rio) can distort the numbers to make them look good.

 

The booking numbers may be up, but it is obvious that NCL is chopping prices and adding "giveaways" to keep the numbers up, and it appears that they will need to continue doing this.

 

The tricks such as adding "service charges" are not setting very well with some people and that leads to word of mouth adverse publicity. Those tactics work for a while, but eventually they may come back to bite the company that does it.

The funny thing is, if as you say they are chopping prices, then how come they have the highest revenue per passenger day of any of the cruise lines. A $100 more then CCL and $70 more then Celebrity.

So if they are chopping prices, it certainly was not impacting their revenue in the most recent quarter filings. I would put it more that they have made some shifts in their revenue models. From the balance of ticket vs onboard revenue percentages one can see that NCLH gets the highest percentage from on board. It would appear that they might have been willing to give more discounts in ticket prices, but make up for it on the back end. However, I am not convinced that NCLH is doing any more specials and deals then their competition is doing as well. The cruise industry is very well known to depend upon discounts, sales and other specials to fill ships.

Now one reason why NCLH is more exposed to current events is the concentration in North America and Europe. Very little Asian presence compared to RCL and CCL. The other two have a number of ships in China, NCL will put their first there next year. This concentration makes it more impacted by Brexit and other events such as Zika. It also might be more prone to being impacted by Zika due to its younger age demographics.

2015 Market Share

CCL 48.1% passengers 42.2% revenue

RCL 23.1% passengers 22.1% revenue

NCLH 10.4% passengers 12.4% revenue

Note that NCLH is the one that gets a higher percentage of revenue, compared to the percentage of passengers. Now part of that is because of the Oceania and Regent. If you look at a comparison of the largest mass market component of each of the companies you get

Carnival 21.3% passengers 8.0% revenue

Royal Caribbean 16.7% passengers 14.2% revenue

Norwegian 9.5% passengers 8.7% revenue

So in 2015 NCL carried less then half of the passengers of Carnival, while getting more revenue. NCL out of the three main mass market lines has the best revenue to passenger ratio (.91), better than RCCL (.85) and certainly better than Carnival (.37). Now while the latest market share data is 2015, the data seems consistent with the 10Q's filed in 2016.

I've never been tempted to try to catch a falling knife.

Good luck.

i have a cruise in oct and in nov.

buying 100shares @$35/share would get me $200 obc ($100 each cruise) in 2 months.

$200/3500 = +5.7%

just xferred $3500 from bank acct to brokerage.