RCL - Norwegian Cruise Line 2024 Investor Day Takeaways: She Sails Despite Debtweight

2024-05-25 06:05:02 ET

Summary

• Norwegian Cruise Line Holdings has underperformed its peers in terms of stock market returns.
• The company has updated its guidance for FY24, showing slight improvements in net yields.
• Norwegian's focus on growth areas, such as ordering new ships and investing in private islands, could lead to additional growth in 2024.
• My models still see ~25% upside after I account for debt servicing.

Investment Thesis

Barring Norwegian Cruise Line Holdings (NCLH), cruise stocks generally enjoyed 2024 with the organic demand tailwinds in their sail. Carnival Corp. (CCL) returned over 40% in 2023, while the largest cruise operator of them all, in terms of market cap, Royal Caribbean Cruises (RCL), delivered at least twice the returns as compared to Carnival Corp. in 2023. Compared to them, Norwegian Cruise Line Holdings delivered sub-par performance, returning low double-digit returns in the stock market.

On a year-to-date basis, Norwegian’s stock continues to languish at the bottom, as seen in Exhibit A below, after projecting growth targets that missed consensus estimates ....

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