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Norwegian Cruise Ord(NCLH-N)

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Why Norwegian Cruise Line Stock Jumped on Tuesday

Motley Fool - Tue Feb 27, 1:11PM CST

Shares of Norwegian Cruise Line Holdings(NYSE: NCLH) jumped on Tuesday after the cruise-ship company reported financial results for the fourth quarter of 2023. As of 1:10 p.m. ET, Norwegian stock was up about 16%.

The trends are right for Norwegian

The company technically reported mixed results for Q4. Revenue was ahead of guidance, whereas its net loss was a little more than expected.

But this stock is soaring today because of the positive prevailing trends in the business. The cruise line can carry more cruisers now than ever (higher capacity), has full occupancy, average ticket prices are up, and onboard spending is up, as well.

Those are the big-picture trends that are meaningful to Norwegian's business. And because the trends are good, the company is guiding for better-than-expected financial results in the upcoming first quarter of 2024.

Specifically, Norwegian is calling for Q1 adjusted net income of $50 million, while Wall Street had expected an adjusted net loss. For the year, the company is expecting earnings before interest, taxes, depreciation, and amortization (EBITDA) of $2.2 billion, a strong 18% increase from 2023.

Norwegian is going to make it

All of the cruise-ship companies incurred significant debt during the worst of the COVID-19 pandemic, including Norwegian. However, the company is paying it down at an admirable pace.

In 2023, the company had net cash from operating activities of $2 billion and repaid $1.9 billion in debt. That's a really good start.

On its current trajectory, it will be able to meet its financial needs although it won't be without some dilution to shareholders. Some of its debt will convert to shares because of how it was arranged.

This dilution could have a mild adverse impact on Norwegian stock. But the business is otherwise performing quite well, which should be encouraging news for shareholders.

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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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