Travel and Vacation Providers Stocks Q3 Teardown: Norwegian Cruise Line (NYSE:NCLH) Vs The Rest
As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the travel and vacation providers industry, including Norwegian Cruise Line (NYSE:NCLH) and its peers.
Airlines, hotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional airlines, hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation.
The 16 travel and vacation providers stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was 0.9% below.
Luckily, travel and vacation providers stocks have performed well with share prices up 16.9% on average since the latest earnings results.
Norwegian Cruise Line (NYSE:NCLH)
With amenities like a full go-kart race track built into its ships, Norwegian Cruise Line (NYSE:NCLH) is a premier global cruise company.
Norwegian Cruise Line reported revenues of $2.81 billion, up 10.7% year on year. This print exceeded analysts’ expectations by 1.4%. Overall, it was a strong quarter for the company with a decent beat of analysts’ adjusted operating income estimates and EBITDA guidance for next quarter topping analysts’ expectations.
"Our exceptional third quarter results, with record revenue, net income and Adjusted EBITDA, surpassed guidance across all key metrics, underscoring the strength of our business, the attractiveness of our product offering across all brands and the superior execution and delivery by our teams both shoreside and shipboard," said Harry Sommer, President and chief executive officer of Norwegian Cruise Line Holdings Ltd. "Fueled by robust demand and our relentless focus on cost control and margin enhancement, we're raising our full-year guidance for a fourth time and expect 2024 to be our best year2 for revenue, Net Yield growth and Adjusted EBITDA.
Norwegian Cruise Line Total Revenue
Interestingly, the stock is up 15.8% since reporting and currently trades at $27.62.
Building mini-communities at places such as oil drilling sites, Target Hospitality (NASDAQ:TH) is a provider of specialty workforce lodging accommodations and services.
Target Hospitality reported revenues of $95.19 million, down 34.8% year on year, outperforming analysts’ expectations by 8.3%. The business had a very strong quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ adjusted operating income estimates.
Target Hospitality Total Revenue
Target Hospitality pulled off the biggest analyst estimates beat and highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 15.9% since reporting. It currently trades at $7.73.
Originally a division of American Airlines, Sabre (NASDAQ:SABR) is a technology provider for the global travel and tourism industry.
Sabre reported revenues of $764.7 million, up 3.3% year on year, falling short of analysts’ expectations by 1.4%. It was a slower quarter as it posted a significant miss of analysts’ EPS estimates.
Sabre delivered the weakest full-year guidance update in the group. As expected, the stock is down 7.3% since the results and currently trades at $3.82.
With almost 100% of its properties under franchise agreements, Choice Hotels (NYSE:CHH) is a hotel franchisor known for its diverse brand portfolio including Comfort Inn, Quality Inn, and Clarion.
Choice Hotels reported revenues of $428 million, flat year on year. This number lagged analysts' expectations by 0.9%. More broadly, it was actually a strong quarter as it put up an impressive beat of analysts’ EPS estimates.
The stock is up 7.4% since reporting and currently trades at $149.
One of the ‘Big Four’ airlines in the US, American Airlines (NASDAQ:AAL) is a major global air carrier that serves both business and leisure travelers through its domestic and international flights.
American Airlines reported revenues of $13.65 billion, up 1.2% year on year. This number surpassed analysts’ expectations by 0.5%. It was a very strong quarter as it also produced a solid beat of analysts’ EPS estimates.
The stock is up 34.9% since reporting and currently trades at $17.34.
As a result of the Fed's rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed's 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump's victory in the US Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain. Said differently, there's still much uncertainty around 2025.
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