Norwegian Cruise Line Holdings (NYSE:NCLH) The stock slumped in afternoon trading Wednesday, falling 15% by 1:35 p.m. ET, despite beating Wall Street analysts’ earnings targets earlier in the morning.
Ahead of the first-quarter 2024 report, analysts had forecast Norwegian would earn $0.11 per share (adjusted for one-time items) on revenue of just over $2.2 billion. Norwegian came close to its revenue target but didn’t quite meet it, although adjusted profit was $0.16 per share. In addition, management increased its full-year guidance.
But apparently it didn’t increase the value enough.
Norwegian Cruise’s first quarter results
Norwegian reported 20% revenue growth in the first quarter due to “strong demand” for cruise services, with “105.7%” of available berths filled in the quarter. (Cruise companies, like airlines, regularly overbook and assume some customers will cancel.)
Profit, calculated using generally accepted accounting principles (GAAP), wasn’t quite as high as the company’s adjusted number – just $0.04 per share. Still, this was a big improvement over the first quarter of last year Loss of $0.38 per share.
Is Norwegian Cruise Stock a Sell?
Management predicts further improvements in the future as bookings reach new records and the company controls its operating costs. Management did not provide any GAAP numbers for guidance, but said full-year “adjusted” earnings would be $1.32 per share, $0.09 higher than previous forecasts and about $0.02 Dollar more than Wall Street expected.
In the short term, the Norwegian company said second-quarter profit will be about $0.32, compared to Wall Street’s forecast of $0.31. However, that’s a much smaller difference than the full-year forecast and suggests that Norwegian is hoping the second half of this year will deliver the bulk of its outperformance. Investors – never a patient lot – may have been hoping for a bigger earnings bump earlier and are discounting the stock for that reason.
Is that fair? Maybe not. Still, the stock was perfectly valued at 48.5 times earnings before the news. The fact that Norwegian’s report was great, but not quite great, is why it’s poorly received today.
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Rich Smith 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.
Why Norwegian Cruise Line Holdings Stock Plunged 15% Today was originally published by The Motley Fool