Cruise line operator, Norwegian Cruise Line Holdings Ltd. (NCLH) will report fourth quarter and full year 2014 results on Feb 17.
Last quarter, the company’s earnings were on par with the Zacks Consensus Estimate. In fact, Norwegian Cruise Line has reported in-line earnings in three of the last four quarters, with second-quarter 2014 being the only odd quarter that missed on earnings. The trailing four-quarter average earnings miss is thus 0.88%.
Let’s see how things are shaping up for this announcement.
Factors to Consider this Quarter
We expect this Miami-based company, which offers cruises in North America, the Mediterranean, the Baltic, Central America, Bermuda and the Caribbean, to gain from low gas prices in the fourth quarter of 2014. Declining gasoline prices are naturally driving travels. With the U.S. economy slowly recovering and consumer confidence on the rise, more Americans are now opting for leisure vacations. Moreover, declining gas prices are an added boon for consumers who are benefiting from a better-looking job market and consistent wage increases. We thus expect the company’s top line to be significantly driven by higher passenger ticket revenues.
We are also impressed by the company’s efforts to expand. In the fourth quarter of 2014, Norwegian Cruise Line completed the acquisition of Prestige Cruises International – the market leader in the upscale cruise segment and parent company of Oceania Cruises and Regent Seven Seas Cruises, for $3.025 billion. Costs related to the acquisition will likely hurt the bottom line in the fourth quarter.
Earnings Whispers
Our proven model does not conclusively show that Norwegian Cruise Line is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00% for the company, as both the figures stand at 38 cents.
Zacks Rank: Norwegian Cruise Line has a Zacks Rank #4 (Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement.
Stocks to Consider
Here are some companies you may want to consider instead as our model shows these have the right combination of elements to post an earnings beat:
Live Nation Entertainment, Inc. (LYV) with an earnings ESP of +5.00% and a Zacks Rank #2.
The Marcus Corporation (MCS) with an earnings ESP of +66.67% and a Zacks Rank #2.
Smith & Wesson Holding Corporation (SWHC) with an earnings ESP of +8.33% and a Zacks Rank #2.
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