A Tale of Two Cruise Line Stocks

Core Insights - Royal Caribbean and Norwegian Cruise Line have shown contrasting financial performances, with Royal Caribbean reporting better-than-expected growth while Norwegian Cruise Line experienced declines [1][2]. Financial Performance - Royal Caribbean's revenue increased by 7% in the first quarter, with adjusted earnings soaring 57% to $2.71 per share, surpassing Wall Street expectations of$2.53 [3]. - In contrast, Norwegian Cruise Line's revenue declined by 3%, and adjusted earnings plummeted 56%, impacted by maintenance work and foreign exchange losses [4]. Key Metrics Comparison - Royal Caribbean's net yield was 4.7%, significantly higher than Norwegian Cruise Line's 1.2%. Additionally, Royal Caribbean's load factor was 109%, compared to NCL's 101.5% [5]. - Over the past four quarters, Royal Caribbean's net margin stood at 19.4%, more than double NCL's 9.1% [6]. Market Valuation - Royal Caribbean trades at a trailing P/E multiple of 19, while Norwegian Cruise Line trades at 10. The 2025 P/E for Royal Caribbean is 15 compared to NCL's 9, and for 2026, it is 13 versus NCL's 7 [9]. - Royal Caribbean's enterprise value is 4.9 times its trailing revenue, more than double NCL's 2.4 times, reflecting its historically superior growth rates and margins [9]. Stock Performance - Year-to-date, Royal Caribbean's stock is flat, while Norwegian Cruise Line is down 32%. Over one year, Royal Caribbean is up 67%, while NCL is up 8%. In three years, Royal Caribbean has gained 196%, whereas NCL is down 13%. Over five years, Royal Caribbean has increased by 464%, compared to NCL's 26% [10]. Investment Perspective - The analysis suggests that paying a premium for a superior operator like Royal Caribbean is justified, despite some arguments for Norwegian Cruise Line as a value play. The long-term prospects for the cruising industry remain promising [11].