NCLH NORWEGIAN Cruise line holding

Sector financial performance:

This company, which is a primarily cruise company earning revenue from passenger tickets (around 70%) and onboard service, has been grouped into cruise line sector in packaged tour industry.
It seems that the demand for cruise line has been getting stronger since 2016 as indicated by increased ticket price (average 2-5% in 2017 and 2018) and capacity for most of companies in this sector. Spending on board has been seen growing as well during the same period (average 4% in 2017 and 2018.
It seems that the rising price and the saving on fuel costs has helped companies to improve their gross margin as revenue increased. We have seen the increased gross margins and EBI/sales ratio from those companies since 2015 by about 300 and 200 basis points respectively. The typical gross margin is about 32%, SG&A is about 16%, operating margin is about 19%, and EBI/sales is about 13% in 2018.
The typical enterprise price/EBI (adjusted with tax field) ratio is 27.

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Company performance:

It seems that the demand for cruise line of this company has been getting stronger since 2016 as indicated by increased revenue resulted from the raising price of ticket.
The first three months of fiscal 2018 compared with the same period of 2017 (ended Mar 312018)
Net yield (organic) increased about 1% due to higher ticket price.
Fiscal 2017 compared with fiscal 2016
Net yield (organic) increased about 5% due to higher ticket price.
Fiscal 2016 compared with fiscal 2015
Net yield (organic) increased about 3% due to higher ticket price.
Its gross margin (including direct operating costs and depreciation) went up from about 29% to 33% due primarily to price rise and efficient management of fuel costs and other expenses. While its SG&A as percentage of sales went up to about 15%, its operating margin was improved to about 20% in 2018.

Stock performance

This company is having an enterprise price/EBI ratio of 26. We think that its stock was relative overvalued compared with company - ROYAL CARIBBEAN CRUISES LTD.

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