Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Norwegian Cruise Line Holdings Ltd.’s (NYSE:NCLH) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
How NCLH fared against its long-term earnings performance and its industry
NCLH’s trailing twelve-month earnings (from 30 June 2019) of US$983m has jumped 19% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 24%, indicating the rate at which NCLH is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s occurring with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Norwegian Cruise Line Holdings has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 7.8% exceeds the US Hospitality industry of 5.9%, indicating Norwegian Cruise Line Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Norwegian Cruise Line Holdings’s debt level, has increased over the past 3 years from 8.0% to 9.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 129% to 103% over the past 5 years.
What does this mean?
Though Norwegian Cruise Line Holdings’s past data is helpful, it is only one aspect of my investment thesis. While Norwegian Cruise Line Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Norwegian Cruise Line Holdings to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NCLH’s future growth? Take a look at our free research report of analyst consensus for NCLH’s outlook.
- Financial Health: Are NCLH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
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