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Norwegian Cruise Line Holdings Ltd NCLH

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Morningstar’s Analysis

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Uncertainty Around Sail Date Leaves Norwegian With Little Near-Term Visibility; Shares Undervalued

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

In a second quarter that held no sailings, Norwegian delivered a $2.78 EPS loss, as only $17 million in revenue was handily outpaced by costs. And with Cruise Lines International Association recently extending its start sail date out to Nov. 1, the third quarter should fare similarly. We remain focused on two key factors in our outlook: (1) when does sailing officially resume, and (2) what do sailing economics look like in a postpandemic world? For no-moat Norwegian, as well as the other cruise lines, it appears the resolutions to these questions stem from its own efforts to remedy risk, as the U.S. Centers for Disease Control and Prevention continues to focus on the unfettered spread of the virus on land. As such, we surmise that Norwegian and Royal Caribbean’s Healthy Sail panel, engaged to improve health and safety standards, will propose adjustments that should appease CDC concerns and share policies across the industry to regain confidence with consumers in upcoming months.

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Company Profile

Business Description

Norwegian Cruise Line is the world's third- largest cruise company by berths (at nearly 60,000), operating 28 ships across three brands (Norwegian, Oceania, and Regent Seven Seas), offering both freestyle and luxury cruising. With nine passenger vessels on order among its brands through 2027, Norwegian is increasing capacity faster than its peers, expanding its brand globally. Norwegian sails to more than 450 global destinations.

Contact
7665 Corporate Center Drive
Miami, FL, 33126, Bermuda
T +1 305 436-4000
Sector Consumer Cyclical
Industry Travel Services
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2019
Stock Type
Employees 36,000

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