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 1.77%, juxtaposed with a three-month change of -16.83%. 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.
What Is 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: 3/10
- 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 a GF Score of 60 out of 100, which signals poor future outperformance potential.
Understanding Norwegian Cruise Line Holdings Ltd's Business
Norwegian Cruise Line Holdings Ltd, with a market cap of $6.13 billion and sales of $8.08 billion, operates as the world's third-largest cruise company by berths, managing 31 ships across three brands. The company, which boasts an operating margin of 6.5%, had redeployed its entire fleet as of May 2022. With plans to expand capacity through six passenger vessels on order among its brands through 2028, Norwegian Cruise Line Holdings Ltd is set to increase its global presence, sailing to around 700 destinations worldwide.
Financial Strength Breakdown
Norwegian Cruise Line Holdings Ltd's financial strength indicators present some concerning insights about the company's balance sheet health. With an interest coverage ratio of 0.74, it is positioned worse than 88.83% of companies in the Travel & Leisure industry. The company's Altman Z-Score of just -0.04 is below the distress zone, indicating potential financial distress. A low cash-to-debt ratio of 0.05 and a high debt-to-equity ratio of 31.63 further exacerbate the company's financial vulnerabilities. Moreover, a debt-to-Ebitda ratio of 10.18 surpasses the warning level set by Joel Tillinghast, suggesting a red flag for the company's debt management.
Growth Prospects
The growth outlook for Norwegian Cruise Line Holdings Ltd is not promising, as reflected by its low Growth rank. The company's revenue has declined by an average of 27.2% per year over the past three years, which is worse than 87.35% of companies in the Travel & Leisure industry. This decline in revenue, coupled with a one-star predictability rank, adds to the uncertainty surrounding the company's future revenue and earnings consistency.
Next Steps
Considering Norwegian Cruise Line Holdings Ltd's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors seeking more robust investment opportunities may explore companies with stronger GF Scores using the GF Score Screen. As the cruise industry faces a turbulent sea of challenges, it remains to be seen whether Norwegian Cruise Line Holdings Ltd can navigate through these financial straits and chart a course for growth and profitability.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
