Norwegian Cruise Line stock’s (NYSE: NCLH ) 33% year-to-date decline is a notable contrast to the S&P 500 index’s 0.6% decline. This trend reflects broader weakness in the cruise industry, with Carnival Corp retreating 12%, Viking Holdings dropping 2%, and Royal Caribbean stock showing a slight gain of 3%.
Norwegian recently reported mixed Q1 results. Adjusted EPS came in at $0.07, missing the consensus estimate of $0.09, while revenue reached $2.13 billion, slightly below the $2.15 billion forecast. GAAP net loss was $40.3 million. Occupancy of 101.5% met guidance but declined year-over-year due to increased dry-dock activity. While management noted some “softening” in forward bookings, the advance ticket sales balance grew 2.6% year-over-year to $3.9 billion, signaling continued underlying demand.
That said, NCLH stock appears unattractive at its current price of around $17. We believe there are several major concerns with NCLH stock, which makes it unattractive despite its very low valuation. See Buy or Sell Norwegian Cruise stock?
We arrive at our conclusion by comparing the current valuation of NCLH stock with its operating performance over the recent years, as well as its current and historical financial condition. Our analysis of Norwegian Cruise Line along key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience shows that the company has a very weak operating performance and financial condition, as detailed below. For investors seeking more stable returns with less volatility, the Trefis High Quality Portfolio may offer a compelling alternative, having outperformed the S&P 500 with over 91% returns since inception.
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How does Norwegian Cruise’s valuation look vs. the S&P 500?
Going by what you pay per dollar of sales or profit, NCLH stock looks cheap compared to the broader market.
• Norwegian Cruise Line has a price-to-sales (P/S) ratio of 0.8 vs. a figure of 2.8 for the S&P 500
• Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 3.9 compared to 17.6 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 10.5 vs. the benchmark’s 24.5
How have Norwegian Cruise’s revenues grown over recent years?
Norwegian Cruise Line’s Revenues have seen notable growth over recent years.
• Its revenues have grown 10.9% from $8.5 Bil to $9.5 Bil in the last 12 months (vs. growth of 5.3% for S&P 500)
• Also, its quarterly revenues declined 3% to $2.1 Bil in the most recent quarter from $2.2 Bil a year ago (vs. 4.9% improvement for S&P 500)
How profitable is Norwegian Cruise Line?
Norwegian Cruise Line’s profit margins are around the median level for companies in the Trefis coverage universe.
• Norwegian Cruise Line’s Operating Income over the last four quarters was $1.5 Bil, which represents a moderate Operating Margin of 15.5% (vs. 13.1% for S&P 500)
• Norwegian Cruise Line’s Operating Cash Flow (OCF) over this period was $2.0 Bil, pointing to a moderate OCF Margin of 21.6% (vs. 15.7% for S&P 500)
• For the last four-quarter period, Norwegian Cruise Line’s Net Income was $910 Mil – indicating a moderate Net Income Margin of 9.6% (vs. 11.3% for S&P 500)
Does Norwegian Cruise look financially stable?
Norwegian Cruise Line’s balance sheet looks very weak.
• Norwegian Cruise Line’s Debt figure was $13 Bil at the end of the most recent quarter, while its market capitalization is $7.6 Bil (as of 5/21/2025). This implies a very poor Debt-to-Equity Ratio of 163.6% (vs. 21.5% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $185 Mil of the $21 Bil in Total Assets for Norwegian Cruise Line. This yields a very poor Cash-to-Assets Ratio of 1.0% (vs. 15.0% for S&P 500
How resilient is NCLH stock during a downturn?
NCLH stock has fared much worse than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Inflation Shock (2022)
• NCLH stock fell 69.2% from a high of $33.71 on 8 June 2021 to $10.38 on 16 June 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $29.07 on 30 January 2025 and currently trades at around $17.20
Covid Pandemic (2020)
• NCLH stock fell 87.0% from a high of $59.65 on 17 January 2020 to $7.77 on 18 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock is yet to recover to its pre-Crisis high
Putting all the pieces together: What it means for NCLH stock
In summary, Norwegian Cruise Line’s performance across the parameters detailed above are as follows:
• Growth: Very Strong
• Profitability: Neutral
• Financial Stability: Extremely Weak
• Downturn Resilience: Extremely Weak
• Overall: Weak
Hence, despite its very low valuation, we think that the stock is unattractive, which supports our conclusion that NCLH is a bad stock to buy.
While you would do well to avoid NCLH stock for now, you could explore the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
