Shares of cruise operator Norwegian Cruise Lines (NCLH +0.64%) fell 17.7% in November, according to data from S&P Global Market Intelligence.
Norwegian and its peers have been digging themselves out of the debt holes each fell into during the pandemic, when virtually all cruising came to a halt for over a year. Yet following the pandemic, consumers came back with a vengeance in a "revenge travel" recovery.
Yet this third quarter, Norwegian's growth, while still present, appeared to slow a bit relative to analyst expectations. The below-expectations results indicate the ultra-strong cruising environment of the past few years may be moderating down to a more normal growth cadence.

NYSE: NCLH
Key Data Points
Norwegian delivers solid but underwhelming results
In the third quarter, Norwegian reported revenue growth of 4.7% to $2.94 billion, while earnings per share declined 9.5% to $0.86 per share. Both figures missed analysts' expectations.
While the top-line miss was a bit worrisome, investors shouldn't stress too much about the decline in earnings per share. That's because Norwegian engaged in a series of capital markets refinancing transactions, and the company included a non-cash loss on the early extinguishment of some debt as part of its interest expenses. Absent that, Norwegian's adjusted (non-GAAP) earnings per share actually grew 17.6% to $1.20 per share.
Still, even those better numbers underwhelmed investors, who had grown used to consistent blockbuster growth from the cruise operators over the past few years. For the current quarter, management also guided to $555 million in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) and $0.27 per share in adjusted earnings, both of which were below analysts' fourth-quarter projections.
Norwegian's earnings were no disaster, but it still has a lot of debt
The double-digit sell-off in relation to these slight misses may seem overdone, as Norwegian's revenue and profits are generally improving, while other key performance indicators, such as load factors, gross and operating margins, and other various metrics, are all moving in the right direction. Moreover, Norwegian looks cheap on a P/E basis, as the stock trades at just nine times this year's adjusted earnings estimates.
The problem is that Norwegian still has a significant debt load, with a net-debt-to-EBITDA ratio of 5.4. That means that any little slip-up may result in investors abandoning the stock.
Still, for those who believe the cruising industry will remain solidly profitable and growing for the foreseeable future, which would allow Norwegian to continue to de-lever, November's sell-off could present a long-term opportunity.




