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Norwegian Cruise Lines May Outperform Carnival And Royal Caribbean

Summary

Norwegian Cruise Lines has a lower valuation and higher expected growth than its competitors.

The cruise industry’s compound annual growth rate of 6.55% will help drive Norwegian’s growth.

Norwegian has some unique differentiators that make it stand out above its peers.

image source: ncl.eu

After having experienced a few cruises, I realize they can be a great relaxing vacation. There is an abundance of entertainment, food, drinks, excursions, etc. You can choose to be active and participate in various activities or you can be passive and relax by the pool or do a little of both. You can eat at all of the formal dinners and/or enjoy the casual buffets. Overall, it is an experience where travelers can easily let go of everyday stresses and enjoy time off from work.

The cruise line that I think stands out as having the highest growth potential in terms of revenue and earnings is Norwegian Cruise Lines (NASDAQ:NCLH). Norwegian is a good combination of low valuation and strong growth. Since Norwegian has a lower valuation and higher expected earnings growth (consensus) than Carnival (NYSE:CCL) and Royal Caribbean (NYSE:RCL), Norwegian's stock is likely to outpace its competitors.

The cruise industry's compound annual growth rate of 6.55% is expected to last through 2019 according to cruisemarketwatch.com. This will be beneficial for all of the cruise lines. I expect all of the cruise lines to perform well over the next two years as long as no major incidents occur that would change vacationers' perceptions of cruising.

The cruise industry has been increasingly offering larger capacity ships and more ports/destinations that consumers are demanding. This has helped drive growth in the demand for cruises.

Norwegian has some...


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