Update: Norwegian Cruise Line Earnings

Aug.11.14 | About: Norwegian Cruise (NCLH)


The company beat earnings consensus by 2%.

We still think the company is a great long-term buy given the rebounding economy.

The recent beat and reiterated earnings guidance for 2014 is right on track with where we thought the company would be.

Norwegian Cruise Line (NASDAQ:NCLH) managed to post 2Q earnings that came in above estimates, posting $0.58 a share (compared to $0.57 consensus). However, revenues of $766 million missed consensus of $798 million. Its $0.58 a share earnings were also well above the $0.29 from 2Q 2013.

The company noted that 2Q was the first full quarter that its two newest Breakaway-class ships were in operation, which are premium, earnings-rich, ships. The cruise ship operator also reiterated its full year 2014 guidance and consensus for the year is expected to be $2.24 a share -- suggesting over 60% y/y growth.

Since we first profiled the company back in May, shares are essentially flat. However, we still feel the company can hit $40 a share in a relatively short time period. It's still the only major cruise line operator that doesn't offer a dividend yield, which should change as the company works down debt. We also like Norwegian's smaller size, noting,

The likes of Carnival and Royal Caribbean operate on a large scale, but Norwegian Cruise Line remains much nimbler. This includes being able to shift its fleet to markets having the highest demand. Given the nimbleness of the company, its return on assets dominates its peers. Norwegian Cruise's return on assets is 4.1%, while Carnival and Royal Caribbean have returns on assets of 2.4% and 2.7%, respectively.

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