2024-07-26 11:06:12 ET
Summary
- NCLH is struggling with low margins, high costs, and a higher weighted cost of capital compared to returns on invested capital.
- Despite record bookings and growth in capacity, NCLH has failed to provide stock appreciation to shareholders since their IPO in 2013.
- Fundamental analysis shows NCLH trades at a slight discount compared to better performing peers, but I have concerns about debt levels, negative free cash flow, and shareholder dilution.
Investment thesis
I previously wrote about the growing cruise line industry with articles on two competitors of Norwegian Cruise Line Holdings Ltd. ( NCLH ) when I discussed Royal Caribbean Cruises Ltd. ( RCL ) as the clear industry winner in the article titled " Royal Caribbean Cruises: Estimated Earnings Already Priced In, " and Carnival Corporation & plc ( CCL ) as an overvalued company in the article titled " Carnival Corporation: Significantly Overvalued. " In this rapidly growing vacation industry, I wanted to see if one of the other cruise line companies would present a fundamental value opportunity as RCL did before the company went on such a tear with rapid stock appreciation....
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Norwegian Cruise Line Holdings Struggling In A Growing Industry