Long-established in the Travel & Leisure industry, Norwegian Cruise Line Holdings Ltd (NCLH, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 1.15%, juxtaposed with a three-month change of -20.85%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Norwegian Cruise Line Holdings Ltd.
Deciphering the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 2/10
- Profitability rank: 6/10
- Growth rank: 1/10
- GF Value rank: 2/10
- Momentum rank: 10/10
Based on the above method, GuruFocus assigned Norwegian Cruise Line Holdings Ltd the GF Score of 58 out of 100, which signals poor future outperformance potential.
Understanding Norwegian Cruise Line Holdings Ltd's Business
Norwegian Cruise Line is the world's third-largest cruise company by berths, operating 30 ships across three brands (Norwegian, Oceania, and Regent Seven Seas), offering both freestyle and luxury cruising. With a market cap of $6.59 billion and sales of $7.16 billion, the company had redeployed its entire fleet as of May 2022. With seven passenger vessels on order among its brands through 2028, Norwegian is increasing capacity faster than its peers, expanding its brand globally. However, a negative operating margin of -2.55% raises concerns about its profitability.
Financial Strength Breakdown
Norwegian Cruise Line Holdings Ltd's financial strength indicators present some concerning insights about the company's balance sheet health. The company's low cash-to-debt ratio at 0.07 indicates a struggle in handling existing debt levels. The company's debt-to-equity ratio is 903.85, which suggests over-reliance on borrowing and vulnerability to market fluctuations. Additionally, the company's debt-to-Ebitda ratio is 21.12, which is above Joel Tillinghast's warning level of 4.
Growth Prospects
A lack of significant growth is another area where Norwegian Cruise Line Holdings Ltd seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -27.2 per year over the past three years, which underperforms worse than 86.35% of 769 companies in the Travel & Leisure industry.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While the company has a strong brand and global presence, its financial health and growth prospects raise concerns. Investors should tread carefully and consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
