Norwegian Cruise Line Holdings (NASDAQ: NCLH) and Royal Caribbean Cruises (NYSE:RCL) are both large-cap cyclical consumer goods & services companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitabiliy, dividends, analyst recommendations, risk and institutional ownership.
This is a breakdown of current recommendations for Norwegian Cruise Line Holdings and Royal Caribbean Cruises, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Norwegian Cruise Line Holdings||0||7||8||0||2.53|
|Royal Caribbean Cruises||0||3||15||0||2.83|
Norwegian Cruise Line Holdings currently has a consensus target price of $56.29, indicating a potential downside of 3.55%. Royal Caribbean Cruises has a consensus target price of $116.92, indicating a potential downside of 2.97%. Given Royal Caribbean Cruises’ stronger consensus rating and higher probable upside, analysts clearly believe Royal Caribbean Cruises is more favorable than Norwegian Cruise Line Holdings.
Valuation and Earnings
This table compares Norwegian Cruise Line Holdings and Royal Caribbean Cruises’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Norwegian Cruise Line Holdings||$4.95 billion||2.69||$1.39 billion||$2.73||21.38|
|Royal Caribbean Cruises||$8.68 billion||2.99||$2.67 billion||$7.12||16.92|
Royal Caribbean Cruises has higher revenue and earnings than Norwegian Cruise Line Holdings. Royal Caribbean Cruises is trading at a lower price-to-earnings ratio than Norwegian Cruise Line Holdings, indicating that it is currently the more affordable of the two stocks.
Royal Caribbean Cruises pays an annual dividend of $1.92 per share and has a dividend yield of 1.6%. Norwegian Cruise Line Holdings does not pay a dividend. Royal Caribbean Cruises pays out 27.0% of its earnings in the form of a dividend. Royal Caribbean Cruises has raised its dividend for 5 consecutive years.
Institutional and Insider Ownership
86.2% of Norwegian Cruise Line Holdings shares are owned by institutional investors. Comparatively, 71.7% of Royal Caribbean Cruises shares are owned by institutional investors. 1.0% of Norwegian Cruise Line Holdings shares are owned by company insiders. Comparatively, 15.3% of Royal Caribbean Cruises shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Volatility and Risk
Norwegian Cruise Line Holdings has a beta of 1.16, suggesting that its share price is 16% more volatile than the S&P 500. Comparatively, Royal Caribbean Cruises has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.
This table compares Norwegian Cruise Line Holdings and Royal Caribbean Cruises’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Norwegian Cruise Line Holdings||5.38%||5.42%||1.91%|
|Royal Caribbean Cruises||17.73%||16.71%||6.94%|
Royal Caribbean Cruises beats Norwegian Cruise Line Holdings on 13 of the 17 factors compared between the two stocks.
Norwegian Cruise Line Holdings Company Profile
Norwegian Cruise Line Holdings Ltd. (NCLH) is a global cruise company. The Company operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. The Company had 25 ships with approximately 50,400 Berths, as of May 1, 2017. The Company’s brands offer itineraries to various destinations around the world, including Europe, Asia, Australia, New Zealand, South America, Africa, Canada, Bermuda, Caribbean, Alaska and Hawaii. The Company’s brands offer various features, amenities, and activities, including various accommodations, multiple dining venues, bars and lounges, spa, casino and retail shopping areas and various entertainment choices. All the brands offer a selection of shore excursions at each port of call, as well as hotel packages for stays before or after a voyage. As of December 31, 2016, its Norwegian offered 14 ships that were purpose-built to deliver the Freestyle Cruising product, which offered freedom, flexibility and choice to its guests.
Royal Caribbean Cruises Company Profile
Royal Caribbean Cruises Ltd. is a cruise company. The Company owns and operates three global cruise brands: Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises (Global Brands). The Company also own joint venture interest in the German brand TUI Cruises, interest in the Spanish brand Pullmantur and interest in the Chinese brand SkySea Cruises (collectively, Partner Brands). Together, its Global Brands and its Partner Brands operate a combined total of 49 ships in the cruise vacation industry with an aggregate capacity of approximately 123,270 berths as of December 31, 2016. As of December 31, 2016, the Company’s ships offer a selection of itineraries that call on approximately 535 destinations in 105 countries, covering all seven continents. Royal Caribbean International offers a range of itineraries to the destinations, including Alaska, Asia, Australia, Canada, the Caribbean, the Panama Canal and New Zealand with cruise lengths that range from 2 to 24 nights.
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