NCL stock down on mixed earnings results.

[mscdivina2016]

If cruise lines can't make profits with oil in the low $40s it doesn't bode well going forward.

 

I was under the impression that the ships used Bunker fuel. That is about 60 cents a gallon I estimate as I also thought it was purchased by the ton.

 

Steve

[fshagan]

If discounted prices are all the customer is prepared to pay, then deep discounting can and will go on forever (basic supply/demand). However in order to facilitate this, they need to remove significant cost from the balance sheet. One significant cost is the cost of ships. In order to remove it, they would need to go bust, wiping out the shareholders.

 

I don't know why you bolded the part of your statement that shows your first assertion, that "deep discounting can and will go on forever", is obviously untrue. But thanks for doing my work for me.

 

I haven't seen a fare recently for Renaissance Cruise Lines, have you?

Edited August 18, 2016 by fshagan

[Shawnino]

I was under the impression that the ships used Bunker fuel. That is about 60 cents a gallon I estimate as I also thought it was purchased by the ton.

 

Steve

 

You're almost certainly right but I think my point stands: whatever distillate/sludge they power the ships with, it's cheap-ish now compared to what it will be.

[swedish weave]

Just looked and NCL is up 2.74% and RCCL is down .08% and since I don't purchase items based on what a CEO makes or where the company's stock is, I'll keep both my NCL and Celebrity cruises.

 

NCLH stock is down 0.44% already this morning. The price of $38.49 is down quite a lot from a high of over $64.00 a while back.

 

38.49 -0.17 (0.44%)

Aug 18, 9:57 AM EDT - Disclaimer

+ ()

Open: 38.54

High: 38.74

Low: 38.34

Volume: 47,163

Avg Vol: 2,541,373

Mkt Cap: 8.98B

Edited August 18, 2016 by swedish weave

[swedish weave]

You're almost certainly right but I think my point stands: whatever distillate/sludge they power the ships with, it's cheap-ish now compared to what it will be.

 

All large transportation companies buy fuel futures which eliminates the price fluctuations for many months ahead of the actual use.

[Warm Breezes]

I think that's the situation that NCL is trying to correct. I seem to remember that the break even point was 105% of capacity (based on 2 people per cabin). Something like that. So they depended on alcohol sales and other on-board revenue to generate profit.

 

The prices are higher with the promos, so there's probably a spreadsheet somewhere showing that the higher average fare plus the not-quite-free promo on beverage plan gets them to break even and profit earlier. Maybe they are OK at 90% capacity with the higher fares.

 

Deep discounting can't go on forever so prices are higher on most cruise lines (lots of grumbling on the other cruise line forums too).

 

Is it really that much higher? My personal experience on this is as follows (I am only looking at the base price, meals, and drinks for comparison purposes):

 

NCL Jewel Cruise Balcony 7 nights Oct 2013 out of New Orleans, no promos base price $1700. We purchased 1 specialty restaurant $70 (incl. tip) and spent approx. $100 for about 6-8 drink drinks total (incl. gratuities).

 

NCL Escape Cruise Balcony 7 nights Sept 2017 out of Miami, Free UBP and Free SDP (need to pay gratuities) base price (without gratuities) $2000. We will be paying $230 in gratuities for unlimited drinks and 4 specialty dinners for each of us.

 

So after 4 years I am paying approx. $360 more for 2 people for a 7 day cruise with a balcony on a much newer ship with more amenities, restaurants, and bars including unlimited drinks and 3 more specialty dinners for each of us. Since we will be drinking more and eating more specialty foods on this cruise our variable cost I'm sure went up as did most other standard costs over those 4 years with the exception of probably fuel.

 

By getting me to pay the gratuities of the packages they are getting more of the fixed wages paid for the workers but the food and drink costs would also go up as we would be eating more specialty foods and drinking much more. Is the difference in the base price enough to make up for those additional costs, inflation in the other standard costs, and the higher depreciation on more expensive ship builds? Probably some. But I'm not going to investigate their financials to try to find out. All I know is that IMHO, I think $360 is not a bad increase for the extras I am getting on Escape next year over what I got on NCL Jewel in 2013. I don't expect my experience to match yours or anyone else's. Just stating the facts of my experience and why, for me, NCL is still a good value for my cruising dollar.

[NLH Arizona]

Checking the stock prices is interesting. NCL is down .28%, while RCCL is down 1.55%.

[Shawnino]

All large transportation companies buy fuel futures which eliminates the price fluctuations for many months ahead of the actual use.

 

True, everyone hedges months out they could hedge years out, I've no idea about NCLH hedges..

 

Monthly close has been below $60 since July '15.

 

But NCL isn't down on earnings, so much as it's down on outlook. If the outlook is bad at $45/barrel, what's the outlook going to be at $90?

[RDC1]

I can see the point here. You rightly state that the 'marginal change in revenue per passenger is very material' (Mr Del Rio's '$x more per passenger' statement at his takeover). I do wonder though whether they are actually making that extra, given the number of people who are fed up with last minute changes and are saying 'I'm not now going to spend this on XYZ any more'.

 

IMHO NCL are struggling with their intangibles: reputation and goodwill.

 

Best way to tell is to look at their 10Q filings on EDGAR and compare them to the competition CCL and RCL. Some key metrics would be revenue per passenger, both in fares and on board, as well as capacity measurement as a percentage of bottom bunk capacity. Those will vary quite a bit quarter to quarter. For example capacity will be much higher in the summer due to family travel then the fall.

 

Cruise lines, being in a highly competitive industry is very restricted in their ability to increase fares. The pricing power of all three has been limited, though it has increased somewhat this last year. As such any increases in revenue have had to come from increases in capacity or in on board spending. Somewhat like airlines in that fares have been restricted, while fees and other charges have increased.

Edited August 18, 2016 by RDC1

[StolidCruiser]

Checking the stock prices is interesting. NCL is down .28%, while RCCL is down 1.55%.

 

Even more interesting is checking the 5-year trend for the three leaders. Nearly identical rise and fall... and they are all currently falling.

 

NCL apparently hasn't cornered the market (pardon the pun) on sluggish stock prices.

Edited August 18, 2016 by StolidCruiser

[NLH Arizona]

Even more interesting is checking the 5-year trend for the three leaders. Nearly identical rise and fall... and they are all currently falling.

 

NCL apparently hasn't cornered the market (pardon the pun) on sluggish stock prices.

Even though some would like us to think it, no they haven't cornered the market on sluggish stock prices.

[RDC1]

Looking at the last 10Q (page 21 and 22 has the most interesting tables for a brief glance)

For the quarter ending June 30.

On board revenue in 2016 is 31% compared to 27% for the same quarter in 2015.

 

Occupancy for the quarter was 106.6% compared to 108.7% last year.

 

They did carry more passengers (new capacity) with 4,237,020 passenger days compared with 3,948,773 last year.

 

Average cruise length was 7.48 last year, dropping to 7.37 this year.

[swedish weave]

Even more interesting is checking the 5-year trend for the three leaders. Nearly identical rise and fall... and they are all currently falling.

 

NCL apparently hasn't cornered the market (pardon the pun) on sluggish stock prices.

 

A factor that can be very important in a declining market is the ability of companies to withstand the decline. The debt-equity ratio comes into play with CCL in much better position to hold up than the other two.

[DBRO]

If I was going to buy 100 shares of stock in NCL. What is the best way to go about it? I never invested in stocks on my own.

[swedish weave]

If I was going to buy 100 shares of stock in NCL. What is the best way to go about it? I never invested in stocks on my own.

 

I am probably not a good one to give you this advice because I won't buy NCLH stock. However, you can contact an online broker such as Schwab or Scottrade and they will do the transaction for around 8 or 9 dollars per transaction.

 

You can google how to buy stocks and they will give you step by step instructions. Try this link --- http://www.wikihow.com/Buy-Stocks

[DBRO]

Thanks will check it out

[mking8288]

While most appeared to sound bullish, one fund manager decided to unload some shares, probabaly cutting their losses if they invested short-term http://presstelegraph.com/2016/08/18/lomas-capital-management-llc-decreased-stake-in-norwegian-cruise-line-hldgs-nasdaqnclh-by-7-43-million-as-shares-declined/

 

Maybe the analyst has been reading the sentiments here on CC. Tomorrow might be interesting for market watchers on options trading. since NCLH is heavily institutional owned.

[Shawnino]

While most appeared to sound bullish, one fund manager decided to unload some shares, probabaly cutting their losses if they invested short-term http://presstelegraph.com/2016/08/18/lomas-capital-management-llc-decreased-stake-in-norwegian-cruise-line-hldgs-nasdaqnclh-by-7-43-million-as-shares-declined/

 

Maybe the analyst has been reading the sentiments here on CC. Tomorrow might be interesting for market watchers on options trading. since NCLH is heavily institutional owned.

 

Analysts kind of have to sound bullish if they want to be able to call up a company and have a discussion out-of-the-blue. Slapping a 'Sell' rating on a company is a quick way of becoming persona non grata.

 

If an analyst says something is a Strong Buy, sure, he thinks it's a buy.

If an analyst says something is a Buy, it's either a buy or a hold.

If an analyst says something is a Hold, that's code language for Sell.

[fshagan]

If I was going to buy 100 shares of stock in NCL. What is the best way to go about it? I never invested in stocks on my own.

 

Use a discount broker such as Schwab, Fidelity, or Vanguard. The fee for a 100 shares should be in the $7 to $10 range. Both Fidelity and Schwab have "retail" locations as well, so you may be able to walk into a location and talk to one of their people.

 

Since this is a "buy and hold" type of stock, talk to them about putting it in a deductible IRA if you qualify. If you can't take the tax advantage because of your income level, see if you qualify for a Roth IRA (no tax deduction today but all earnings are tax free).

[Shawnino]

Since this is a "buy and hold" type of stock, talk to them about putting it in a deductible IRA if you qualify. If you can't take the tax advantage because of your income level, see if you qualify for a Roth IRA (no tax deduction today but all earnings are tax free).

 

Great advice for any buy-and-hold situation.

[RDC1]

Use a discount broker such as Schwab, Fidelity, or Vanguard. The fee for a 100 shares should be in the $7 to $10 range. Both Fidelity and Schwab have "retail" locations as well, so you may be able to walk into a location and talk to one of their people.

 

Since this is a "buy and hold" type of stock, talk to them about putting it in a deductible IRA if you qualify. If you can't take the tax advantage because of your income level, see if you qualify for a Roth IRA (no tax deduction today but all earnings are tax free).

 

 

 

I would disagree about holding it in an IRA account. By holding it in a non-retirement account you get beneficial tax treatment for long term capital gains, you also get beneficial tax treatment for dividends, if any, and since any OBC from the cruise line is non-refundable, my accountant says that it is treated as a discount, not as income and non-taxable. You can also take a capital gains loss if the stock drops. At current better off to just hold it long term in a non-retirement account.

 

If you put it in an IRA you loss the ability to use a capital gains loss to offset other income and all profits are taxed at income rates when you pull money out of the IRA at some point in the future. Not a problem with Roth, but still better to use your IRA for other things.

Edited August 19, 2016 by RDC1

[fshagan]

I would disagree about holding it in an IRA account. By holding it in a non-retirement account you get beneficial tax treatment for long term capital gains, you also get beneficial tax treatment for dividends, if any, and since any OBC from the cruise line is non-refundable, my accountant says that it is treated as a discount, not as income and non-taxable. You can also take a capital gains loss if the stock drops. At current better off to just hold it long term in a non-retirement account.

 

If you put it in an IRA you loss the ability to use a capital gains loss to offset other income and all profits are taxed at income rates when you pull money out of the IRA at some point in the future. Not a problem with Roth, but still better to use your IRA for other things.

 

It all depends on your situation and your outlook. Yes, you pay regular income tax rates when you eventually cash it in rather than the (currently) lower capital gains, but that tax may or may not be lower when you cash it in. We don't know what Congress will do with tax rates.

 

Taking the income tax deduction now means you get the benefit of the deduction now. There is time value to money; a dollar today is likely worth 10 to 20 when you retire. And you aren't a slave to what some future Congress decides to do. Most people also have a much lower income in retirement than they do while working, and are in a lower bracket. So deferring income until you are in a lower tax bracket is a good strategy too.

 

But everyone's individual situation is different. I had one couple who contributed $3,000 to an IRA and reduced ACA penalties by much more than that so that one was a no brainer.

[fstuff1]

currently $36.85/share

new 52week low?

 

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

Edited August 24, 2016 by fstuff1

[DGP1111]

:( A new 52-Week low reached during today's trading sessions. :(

 

.

 

Edit: Sorry for duplicate info.

Edited August 24, 2016 by DGP1111

[swedish weave]

currently $36.85/share

new 52week low?

 

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

 

That could be a gamble. If the stock drops another dollar, you lose. (Actually a little less than a dollar)

 

In February this year, NCLH was about five dollars a share higher than Carnival, and now it is a little over ten dollars lower than Carnival. By comparing companies in the same field, it gives me a pretty clear picture of what is happening in the business.

Edited August 24, 2016 by swedish weave