What happened

It's Thursday, and it looks like cruise ship stocks are cruising for another bruising. An ill-timed insider stock sale at Norwegian Cruise Line Holdings (NCLH -0.77%), combined with a negative analyst note, torpedoed shares of the U.S.-based cruiser -- and took shares of Carnival (CCL 1.49%) and Royal Caribbean (RCL 0.04%) down with it.

As of 11:05 a.m. EST today, shares of Carnival are sinking 3%, and Royal Caribbean is diving 4.3%. Norwegian investors, however, are taking the brunt of the damage this morning, as shares of the smallest of the three major publicly traded cruise companies dropped 7.8%.

So what

The story begins at Norwegian Cruise, where CEO Frank Del Rio was just reported to have sold off 4% of his company stock -- 58,072 shares -- in a million-dollar-plus transaction on Tuesday.

His wasn't the only insider transaction at Norwegian, either. According to information from Form4Oracle, which traces insider trading, chief financial officer Mark Kempa sold nearly $500,000 worth of Norwegian stock on Tuesday as well (29% of his stake). And a day earlier, company general counsel Daniel Farkas sold $788,000 worth of stock (16% of his holdings). But it was probably the CEO's sale that first spooked the market.    

The mere fact of these insider sales could be less important to investors than why the insiders are selling. And on that point, Credit Suisse has a few thoughts. This morning, the Swiss investment banker announced a double downgrade of Norwegian stock from outperform all the way down to underperform.

The analyst says Norwegian is at risk of not earning as much in 2023 as it has promised, StreetInsider reported this morning. And if Norwegian does miss estimates, the stock could be especially vulnerable to a sell-off because of its high valuation. When valued on earnings before interest, taxes, depreciation, and amortization (EBITDA), Credit Suisse says, Norwegian's stock costs twice as much as Royal Caribbean's, and four times as much as Carnival's.

Now what

That sounds like a lot, and it's at least a plausible explanation for why Norwegian execs might be cashing in their shares this week.

But when valued on simple earnings according to generally accepted accounting principles (GAAP), Norwegian Cruise stock doesn't look so unreasonably priced at all. Sure, the stock may look a bit more expensive than its peers. According to Yahoo! Finance data, the stock costs 13.9 times forward earnings. With Carnival costing 13.8 forward earnings today, and Royal Caribbean only 13.2 times, the gap in valuations might not actually yawn quite so widely as Credit Suisse suggests.

And even if you buy the analyst's argument that Norwegian Cruise stock is much more expensive than its peers, that doesn't seem to me like a good reason to sell off the cheaper peers Carnival and Royal Caribbean alongside Norwegian Cruise.

Indeed, according to Credit Suisse, in the unlikely event that Norwegian does hit its numbers next year, this would probably only happen if the whole cruise industry is looking pretty healthy at the time. In that case, Carnival and Royal Caribbean would probably look even more attractive than Norwegian, which looks like a stronger argument to buy those shares than to sell them.

The whole stock market seemed alarmed this morning by St. Louis Fed President James Bullard's suggestion that interest rates could rise past 5% to as high as 7%. But with the entire cruise industry on the cusp of finally turning profitable in 2023 after three years of nonstop losses, today just seems like a strange time to decide to sell cruise stocks en masse.