Better Cruise Line Stock: Royal Caribbean vs. Norwegian

Motley Fool06-08

Royal Caribbean and Norwegian rank second and third in the cruise industry, respectively, in terms of size. Both companies benefit from record bookings and are expanding their fleets. ...

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MulanSG
06-17
MulanSG
Thanks for sharing! Did you know shareholders also get cruise credits on the cruise they are sailing on? It's a win-win to support your favourite cruise line and also get usable credits! :)

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This has been a boon, especially to the second- and third-largest cruise line stocks, Royal Caribbean (RCL 0.01%) and Norwegian Cruise Line Holdings (NCLH -2.09%), which are locked in a competitive battle with the largest company in this space, Carnival Corp.Although both Royal Caribbean and Norwegian face similar challenges, one probably holds greater potential to sail to higher returns. Let's take a closer look to see how each company compares.Royal Caribbean vs. NorwegianThe cruise industry appears to have bounced back from the worst period in its history, the COVID-19 pandemic. During the 15-month shutdown induced by the pandemic, each company had to let most of its staff go and borrow money to keep their businesses afloat while they earned almost no revenue. And even when they sailed again in mid-2021, it took several quarters to fill ships back to capacity.Fortunately, both companies have moved on from that time, and their customers have returned. Admittedly, neither company matches the 37% revenue share claimed by Carnival. Still, each owns more than one brand and stands out over smaller cruise lines such as Disney, Viking Cruises, and Switzerland-based MSC Cruises, the fourth-largest cruise line.Royal Caribbean includes its namesake cruise line, as well as Celebrity and Silversea. These three cruise lines claim about 24% of the industry's revenue, according to Cruise Market Watch.Norwegian operates its flagship cruise line and owns two smaller lines, Oceania and Regent Seven Seas. Cruise Market Watch says it generates 14% of the industry's revenue.Moreover, both companies have benefited from record bookings. The industry defines 100% booking as having two passengers in every cabin. By that definition, Royal Caribbean claimed a 107% load factor in the first quarter of 2024, while Norwegian's cabins were 105% occupied during the same period.How they compare financiallyThis recovery has dramatically boosted the financials of both companies. In Q1, Royal Caribbean reported $3.7 billion in revenue, a 29% yearly surge. That increase far exceeded the growth rate, allowing it to report $360 million in net income attributable to the company, well above the $48 million loss in the year-ago quarter.Norwegian did not grow as fast, but its $2.2 billion in Q1 revenue rose 20% over the previous year. As with Royal Caribbean, slower growth in operating expenses allowed it to earn $17 million in profits, up from the $159 million loss in the same quarter last year.Still, the major difference between the two is debt loads. Royal Caribbean holds a total debt of around $20.5 billion, far above its $5.3 billion in stockholders' equity. Norwegian's total debt is $13.7 billion, but its shareholders' equity is $362 million, making its debt burden much heavier in relative terms.That may explain why Royal Caribbean plans to spend $3.4 billion in capital expenditures, versus just $575 million for Norwegian. That means Royal will add more ships to its fleet, which should help it grow its market share faster.Valuations seem to offer a mixed picture of which stock is more expensive. Despite its larger size, Royal Caribbean stock sells for 20 times earnings, lower than Norwegian's 26 price-to-earnings (P/E) ratio. Conversely, from a price-to-sales (P/S) ratio perspective, Royal trades at a 3.0 P/S ratio versus just 0.9 for Norwegian.Since profits can vary more than sales, one would have to assume Norwegian is the lower-cost stock. Still, the relatively lower debt burden and the greater capacity to add new ships could make Royal Caribbean stock worth the premium.A solid choice for setting sailRoyal Caribbean and Norwegian have recovered from the pandemic and will probably continue to benefit from record bookings. Still, Royal Caribbean is likely the more solid choice for investors.Admittedly, Royal Caribbean's debt level is higher, and its stock is more expensive when measured by P/S ratios. Nonetheless, its greater capacity to add ships makes it more likely to increase its market share. That situation should allow it to generate more profit and pay off more debt, which should ultimately lead to higher returns for shareholders.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":317826443350312,"gmtCreate":1718632924678,"gmtModify":1718633607275,"author":{"id":"4173603401613892","authorId":"4173603401613892","name":"MulanSG","avatar":"https://community-static.tradeup.com/news/c0d6af1f717327bb029a3872ce0818a7","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"4173603401613892","authorIdStr":"4173603401613892"},"htmlText":"Thanks for sharing! Did you know shareholders also get cruise credits on the cruise they are sailing on? It's a win-win to support your favourite cruise line and also get usable credits! :)&nbsp;","listText":"Thanks for sharing! Did you know shareholders also get cruise credits on the cruise they are sailing on? It's a win-win to support your favourite cruise line and also get usable credits! :)&nbsp;","text":"Thanks for sharing! Did you know shareholders also get cruise credits on the cruise they are sailing on? It's a win-win to support your favourite cruise line and also get usable credits! :)","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/317826443350312","repostId":2441950024,"repostType":2,"repost":{"id":"2441950024","pubTimestamp":1717834200,"share":"https://ttm.financial/m/news/2441950024?lang=&edition=fundamental","pubTime":"2024-06-08 16:10","market":"us","language":"en","title":"Better Cruise Line Stock: Royal Caribbean vs. Norwegian","url":"https://stock-news.laohu8.com/highlight/detail?id=2441950024","media":"Motley Fool","summary":"An assessment of two of the world's major cruise lines.","content":"<html><body><ul>\n<li>\n<div>\n<svg fill=\"none\" height=\"15\" viewbox=\"0 0 14 15\" width=\"14\" xmlns=\"http://www.w3.org/2000/svg\">\n<path d=\"M14 5.58984C14 2.91016 11.8398 0.75 9.16016 0.75C6.50781 0.777344 4.375 2.91016 4.375 5.5625C4.375 6.10938 4.45703 6.60156 4.59375 7.09375L0.191406 11.4961C0.0546875 11.6328 0 11.7969 0 11.9609V14.0938C0 14.4766 0.273438 14.75 0.65625 14.75H3.71875C4.07422 14.75 4.375 14.4766 4.375 14.0938V13H5.46875C5.82422 13 6.125 12.7266 6.125 12.3438V11.25H7.13672C7.30078 11.25 7.51953 11.168 7.62891 11.0312L8.28516 10.293C8.55859 10.3477 8.85938 10.375 9.1875 10.375C11.8398 10.375 14 8.24219 14 5.58984ZM9.1875 4.25C9.1875 3.53906 9.76172 2.9375 10.5 2.9375C11.2109 2.9375 11.8125 3.53906 11.8125 4.25C11.8125 4.98828 11.2109 5.5625 10.5 5.5625C9.76172 5.5625 9.1875 4.98828 9.1875 4.25Z\" fill=\"#FFB81C\"></path>\n</svg>\n</div>\n<div>Royal Caribbean and Norwegian rank second and third in the cruise industry, respectively, in terms of size. </div>\n</li>\n<li>\n<div>\n<svg fill=\"none\" height=\"15\" viewbox=\"0 0 14 15\" width=\"14\" xmlns=\"http://www.w3.org/2000/svg\">\n<path d=\"M14 5.58984C14 2.91016 11.8398 0.75 9.16016 0.75C6.50781 0.777344 4.375 2.91016 4.375 5.5625C4.375 6.10938 4.45703 6.60156 4.59375 7.09375L0.191406 11.4961C0.0546875 11.6328 0 11.7969 0 11.9609V14.0938C0 14.4766 0.273438 14.75 0.65625 14.75H3.71875C4.07422 14.75 4.375 14.4766 4.375 14.0938V13H5.46875C5.82422 13 6.125 12.7266 6.125 12.3438V11.25H7.13672C7.30078 11.25 7.51953 11.168 7.62891 11.0312L8.28516 10.293C8.55859 10.3477 8.85938 10.375 9.1875 10.375C11.8398 10.375 14 8.24219 14 5.58984ZM9.1875 4.25C9.1875 3.53906 9.76172 2.9375 10.5 2.9375C11.2109 2.9375 11.8125 3.53906 11.8125 4.25C11.8125 4.98828 11.2109 5.5625 10.5 5.5625C9.76172 5.5625 9.1875 4.98828 9.1875 4.25Z\" fill=\"#FFB81C\"></path>\n</svg>\n</div>\n<div>Both companies benefit from record bookings and are expanding their fleets. </div>\n</li>\n<li>\n<div>\n<svg fill=\"none\" height=\"15\" viewbox=\"0 0 14 15\" width=\"14\" xmlns=\"http://www.w3.org/2000/svg\">\n<path d=\"M14 5.58984C14 2.91016 11.8398 0.75 9.16016 0.75C6.50781 0.777344 4.375 2.91016 4.375 5.5625C4.375 6.10938 4.45703 6.60156 4.59375 7.09375L0.191406 11.4961C0.0546875 11.6328 0 11.7969 0 11.9609V14.0938C0 14.4766 0.273438 14.75 0.65625 14.75H3.71875C4.07422 14.75 4.375 14.4766 4.375 14.0938V13H5.46875C5.82422 13 6.125 12.7266 6.125 12.3438V11.25H7.13672C7.30078 11.25 7.51953 11.168 7.62891 11.0312L8.28516 10.293C8.55859 10.3477 8.85938 10.375 9.1875 10.375C11.8398 10.375 14 8.24219 14 5.58984ZM9.1875 4.25C9.1875 3.53906 9.76172 2.9375 10.5 2.9375C11.2109 2.9375 11.8125 3.53906 11.8125 4.25C11.8125 4.98828 11.2109 5.5625 10.5 5.5625C9.76172 5.5625 9.1875 4.98828 9.1875 4.25Z\" fill=\"#FFB81C\"></path>\n</svg>\n</div>\n<div>Debt levels may be the determining factor when deciding between these stocks.</div>\n</li>\n</ul><div><p>After a brutal pandemic, the cruise line industry has not only recovered but also benefited from record bookings. This has been a boon, especially to the second- and third-largest cruise line stocks, <strong>Royal Caribbean </strong><span>(RCL<span> 0.01%</span>)</span> and <strong>Norwegian Cruise Line Holdings </strong><span>(NCLH<span> -2.09%</span>)</span>, which are locked in a competitive battle with the largest company in this space, <strong>Carnival Corp</strong>.</p><p>Although both Royal Caribbean and Norwegian face similar challenges, one probably holds greater potential to sail to higher returns. Let's take a closer look to see how each company compares.</p><h2>Royal Caribbean vs. Norwegian</h2><p>The cruise industry appears to have bounced back from the worst period in its history, the COVID-19 pandemic. During the 15-month shutdown induced by the pandemic, each company had to let most of its staff go and borrow money to keep their businesses afloat while they earned almost no revenue. And even when they sailed again in mid-2021, it took several quarters to fill ships back to capacity.</p><p>Fortunately, both companies have moved on from that time, and their customers have returned. Admittedly, neither company matches the 37% revenue share claimed by Carnival. Still, each owns more than one brand and stands out over smaller cruise lines such as <strong>Disney</strong>, Viking Cruises, and Switzerland-based <a href=\"https://laohu8.com/S/NPW.SI\">MSC</a> Cruises, the fourth-largest cruise line.</p><p>Royal Caribbean includes its namesake cruise line, as well as Celebrity and Silversea. These three cruise lines claim about 24% of the industry's revenue, according to Cruise Market Watch.</p><div><div></div></div><p>Norwegian operates its flagship cruise line and owns two smaller lines, Oceania and Regent Seven Seas. Cruise Market Watch says it generates 14% of the industry's revenue.</p><p>Moreover, both companies have benefited from record bookings. The industry defines 100% booking as having two passengers in every cabin. By that definition, Royal Caribbean claimed a 107% load factor in the first quarter of 2024, while Norwegian's cabins were 105% occupied during the same period.</p><h2>How they compare financially</h2><p>This recovery has dramatically boosted the financials of both companies. In Q1, Royal Caribbean reported $3.7 billion in revenue, a 29% yearly surge. That increase far exceeded the growth rate, allowing it to report $360 million in net income attributable to the company, well above the $48 million loss in the year-ago quarter.</p><p>Norwegian did not grow as fast, but its $2.2 billion in Q1 revenue rose 20% over the previous year. As with Royal Caribbean, slower growth in operating expenses allowed it to earn $17 million in profits, up from the $159 million loss in the same quarter last year.</p><div><div></div></div><p>Still, the major difference between the two is debt loads. Royal Caribbean holds a total debt of around $20.5 billion, far above its $5.3 billion in stockholders' equity. Norwegian's total debt is $13.7 billion, but its shareholders' equity is $362 million, making its debt burden much heavier in relative terms.</p><p>That may explain why Royal Caribbean plans to spend $3.4 billion in capital expenditures, versus just $575 million for Norwegian. That means Royal will add more ships to its fleet, which should help it grow its market share faster.</p><p>Valuations seem to offer a mixed picture of which stock is more expensive. Despite its larger size, Royal Caribbean stock sells for 20 times earnings, lower than Norwegian's 26 price-to-earnings (P/E) ratio. Conversely, from a price-to-sales (P/S) ratio perspective, Royal trades at a 3.0 P/S ratio versus just 0.9 for Norwegian.</p><p>Since profits can vary more than sales, one would have to assume Norwegian is the lower-cost stock. Still, the relatively lower debt burden and the greater capacity to add new ships could make Royal Caribbean stock worth the premium.</p><div><div></div></div><h2>A solid choice for setting sail</h2><p>Royal Caribbean and Norwegian have recovered from the pandemic and will probably continue to benefit from record bookings. Still, Royal Caribbean is likely the more solid choice for investors.</p><p>Admittedly, Royal Caribbean's debt level is higher, and its stock is more expensive when measured by P/S ratios. Nonetheless, its greater capacity to add ships makes it more likely to increase its market share. That situation should allow it to generate more profit and pay off more debt, which should ultimately lead to higher returns for shareholders.</p><div></div></div></body></html>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Better Cruise Line Stock: Royal Caribbean vs. Norwegian</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBetter Cruise Line Stock: Royal Caribbean vs. Norwegian\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-08 16:10 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2024/06/08/better-cruise-line-stock-royal-caribbean-vs-norweg/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Royal Caribbean and Norwegian rank second and third in the cruise industry, respectively, in terms of size. \n\n\n\n\n\n\n\nBoth companies benefit from record bookings and are expanding their fleets. \n\n\n\n\n\n\n\n...</p>\n\n<a href=\"https://www.fool.com/investing/2024/06/08/better-cruise-line-stock-royal-caribbean-vs-norweg/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F779668%2Fcouple-enjoys-sunset-cruise.jpg&op=resize&w=165&h=104","relate_stocks":{"RGLD":"皇家黄金","BK4588":"碎股","BK4017":"黄金","BK4585":"ETF&股票定投概念"},"source_url":"https://www.fool.com/investing/2024/06/08/better-cruise-line-stock-royal-caribbean-vs-norweg/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2441950024","content_text":"Royal Caribbean and Norwegian rank second and third in the cruise industry, respectively, in terms of size. \n\n\n\n\n\n\n\nBoth companies benefit from record bookings and are expanding their fleets. \n\n\n\n\n\n\n\nDebt levels may be the determining factor when deciding between these stocks.\n\nAfter a brutal pandemic, the cruise line industry has not only recovered but also benefited from record bookings. This has been a boon, especially to the second- and third-largest cruise line stocks, Royal Caribbean (RCL 0.01%) and Norwegian Cruise Line Holdings (NCLH -2.09%), which are locked in a competitive battle with the largest company in this space, Carnival Corp.Although both Royal Caribbean and Norwegian face similar challenges, one probably holds greater potential to sail to higher returns. Let's take a closer look to see how each company compares.Royal Caribbean vs. NorwegianThe cruise industry appears to have bounced back from the worst period in its history, the COVID-19 pandemic. During the 15-month shutdown induced by the pandemic, each company had to let most of its staff go and borrow money to keep their businesses afloat while they earned almost no revenue. And even when they sailed again in mid-2021, it took several quarters to fill ships back to capacity.Fortunately, both companies have moved on from that time, and their customers have returned. Admittedly, neither company matches the 37% revenue share claimed by Carnival. Still, each owns more than one brand and stands out over smaller cruise lines such as Disney, Viking Cruises, and Switzerland-based MSC Cruises, the fourth-largest cruise line.Royal Caribbean includes its namesake cruise line, as well as Celebrity and Silversea. These three cruise lines claim about 24% of the industry's revenue, according to Cruise Market Watch.Norwegian operates its flagship cruise line and owns two smaller lines, Oceania and Regent Seven Seas. Cruise Market Watch says it generates 14% of the industry's revenue.Moreover, both companies have benefited from record bookings. The industry defines 100% booking as having two passengers in every cabin. By that definition, Royal Caribbean claimed a 107% load factor in the first quarter of 2024, while Norwegian's cabins were 105% occupied during the same period.How they compare financiallyThis recovery has dramatically boosted the financials of both companies. In Q1, Royal Caribbean reported $3.7 billion in revenue, a 29% yearly surge. That increase far exceeded the growth rate, allowing it to report $360 million in net income attributable to the company, well above the $48 million loss in the year-ago quarter.Norwegian did not grow as fast, but its $2.2 billion in Q1 revenue rose 20% over the previous year. As with Royal Caribbean, slower growth in operating expenses allowed it to earn $17 million in profits, up from the $159 million loss in the same quarter last year.Still, the major difference between the two is debt loads. Royal Caribbean holds a total debt of around $20.5 billion, far above its $5.3 billion in stockholders' equity. Norwegian's total debt is $13.7 billion, but its shareholders' equity is $362 million, making its debt burden much heavier in relative terms.That may explain why Royal Caribbean plans to spend $3.4 billion in capital expenditures, versus just $575 million for Norwegian. That means Royal will add more ships to its fleet, which should help it grow its market share faster.Valuations seem to offer a mixed picture of which stock is more expensive. Despite its larger size, Royal Caribbean stock sells for 20 times earnings, lower than Norwegian's 26 price-to-earnings (P/E) ratio. Conversely, from a price-to-sales (P/S) ratio perspective, Royal trades at a 3.0 P/S ratio versus just 0.9 for Norwegian.Since profits can vary more than sales, one would have to assume Norwegian is the lower-cost stock. Still, the relatively lower debt burden and the greater capacity to add new ships could make Royal Caribbean stock worth the premium.A solid choice for setting sailRoyal Caribbean and Norwegian have recovered from the pandemic and will probably continue to benefit from record bookings. Still, Royal Caribbean is likely the more solid choice for investors.Admittedly, Royal Caribbean's debt level is higher, and its stock is more expensive when measured by P/S ratios. Nonetheless, its greater capacity to add ships makes it more likely to increase its market share. That situation should allow it to generate more profit and pay off more debt, which should ultimately lead to higher returns for shareholders.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":1,"commentSize":1,"repostSize":1,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2441950024"}