Last update on 2024-06-06

Norwegian Cruise Line Holdings (NCLH) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Norwegian Cruise Line Holdings (NCLH) - Piotroski F-Score analysis for 2023 with a score of 7/9. Discover insights on profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 7

We're running Norwegian Cruise Line Holdings (NCLH) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Norwegian Cruise Line Holdings (NCLH) scored a 7 out of 9 on the Piotroski F-Score, which suggests that the company has a good financial position overall, but with some concerns. **Profitability:** - NCLH returned to a positive net income of $166M in 2023 after severe losses in 2020 and 2021. - Cash flow from operations was very strong at $2 billion in 2023. - Return on Assets (ROA) also showed improvement from -0.1218 in 2022 to 0.0087 in 2023 but is still below industry standards. - Operating cash flow was much higher than net income, indicating strong cash generation. **Liquidity:** - Leverage has increased slightly from 2022 to 2023, meaning higher financial risk. - Current Ratio improved but remains well below the healthy threshold of 1.5. - Shares outstanding increased, which could dilute shareholder value. **Efficiency:** - Gross margin improved significantly from 0.1191 in 2022 to 0.3604 in 2023. - Asset turnover ratio showed improved efficiency, suggesting better use of assets for generating revenue.

Insights for Value Investors Seeking Stable Income

While Norwegian Cruise Line Holdings (NCLH) shows strong signs of recovery, particularly in profitability and operational efficiency, its liquidity and leverage remain concerns. The positive net income, strong operating cash flow, and improving gross margin are promising signs, but the increasing leverage and low current ratio indicate some financial risk. Investors should be cautiously optimistic and consider the company's ability to handle its debt and improve its liquidity before making a decision. It's worth monitoring NCLH for a few more quarters to ensure the improvements are sustainable and to see if they address their liquidity issues.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Norwegian Cruise Line Holdings (NCLH)

Company has a positive net income?

Checking if the net income is positive indicates the company's profitability, and consistent positive income is a sign of good management and growth.

In 2023, the net income for Norwegian Cruise Line Holdings (NCLH) was $166,178,000, which is a positive figure. Analyzing the trend of net income over the last 20 years shows some significant fluctuations, with peaks in 2014 ($338,352,000) and 2015 ($427,137,000), and reaching its highest in 2017 and 2018 at $759,872,000 and $954,843,000 respectively. However, the company faced severe losses during the pandemic years of 2020 and 2021, with net incomes of -$4,012,514,000 and -$4,506,587,000 respectively. The return to positive net income in 2023 indicates a significant recovery. Given these data, the trend is good for this criterion as the company has achieved a positive net income after turbulent years.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a key indicator of a company's capacity to generate sufficient cash from its core business activities. It's important for assessing the sustainability of a company’s operations.

The CFO for Norwegian Cruise Line Holdings (NCLH) in 2023 stood at $2,005,714,000, which is positive and earns the company 1 point in Piotroski Analysis. This positive trend indicates strong operational performance. Additionally, examining the historical data, the company's CFO has shown volatility, particularly negative in 2020 and 2021 due to the COVID-19 pandemic-related impacts on the cruise industry. Nonetheless, the rebound in 2023 underscores a significant recovery and resilience.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures how effectively a company utilizes its assets to generate profit. An improving ROA indicates better efficiency.

Norwegian Cruise Line Holdings (NCLH) saw its ROA improve from -0.1218 in 2022 to 0.0087 in 2023, signifying a positive trend. This increase scores 1 point in the Piotroski Analysis. The last 20 years show the company's cyclical performance, with the ROA improving in 2023. However, it's still below the industry median ROA of 0.8214 for 2023. Recent financials detail NCLH's huge leap in operating cash flow to $2,005,714,000 in 2023, up from $210,020,000 in 2022, fostering overall asset utilization. So, while improving, NCLH remains a prudent watch on how it aligns nearer to industry standards.

Operating Cashflow are higher than Netincome?

Examining whether the Operating Cash Flow exceeds Net Income helps evaluate if a company can sustain its profitability without relying on accounting adjustments. Consistent cash inflows boost financial stability.

For Norwegian Cruise Line Holdings (NCLH) in 2023, the Operating Cash Flow stands at $2,005,714,000, significantly higher than the Net Income of $166,178,000. This positive trend is notable when compared over the last 20 years, indicating robust cash generation relative to profits. From 2004 to 2023, NCLH has generally seen fluctuations in both metrics, but their operating liquidity shows stronger recovery post-pandemic. Given the significant gap, NCLH earns a score of 1 for this criterion, showcasing strong cash flow health amid recovery.

Liquidity of Norwegian Cruise Line Holdings (NCLH)

Leverage is declining?

Change in leverage measures if a company has reduced its debt levels relative to its equity, indicating reduced financial risk.

Comparing the leverage of Norwegian Cruise Line Holdings (NCLH) in 2022 (0.6806) with 2023 (0.6317), leverage has increased in 2023. Therefore, 0 points are added for this criterion. An increasing leverage indicates a higher level of debt relative to equity, which is generally bad as it suggests higher financial risk.

Current Ratio is growing?

Assessing the Change in Current Ratio

Despite seeing an increase in the Current Ratio in the period from 2022 (0.3705) to 2023 (0.2175), Norwegian Cruise Line Holdings didn't demonstrate strong financial health. Anything above 1.5 is typically considered healthy, which is far from the displayed values. The 20-year chart reveals that NCLH's Current Ratio has consistently underperformed when compared to the industry median, indicating potential liquidity issues throughout this period.

Number of shares not diluted?

Change in Shares Outstanding evaluates a company's issuance or buyback activities, affecting shareholder value.

The Outstanding Shares for Norwegian Cruise Line Holdings increased from 419,773,195 in 2022 to 424,424,962 in 2023. This increment in shares is generally negative for shareholders as it indicates potential dilution of equity value. Over the past two decades, significant jumps are seen in 2020 and 2022, indicative of possible fundraising activities perhaps in response to financial pressures, notably around the COVID-19 pandemic. Consequently, NCLH scores 0 points on this criterion.

Operating of Norwegian Cruise Line Holdings (NCLH)

Cross Margin is growing?

The change in Gross Margin reflects a company's ability to effectively manage its production costs relative to its net sales, an essential factor in profitability analysis.

Norwegian Cruise Line Holdings (NCLH) saw an improvement in its Gross Margin from 0.1191 in 2022 to 0.3604 in 2023. This significant increase, almost tripling the Gross Margin, indicates a better control over production costs. Such an enhancement is a positive sign for investors and analysts as it suggests the company is moving toward greater profitability. Historically, the Gross Margin for NCLH has fluctuated but has usually maintained a steady upward trend, especially before the COVID-19 pandemic hit the industry hard. For context, the industry's median Gross Margin for 2023 is 0.8214, which means NCLH still lags behind the industry standards, although the current improvement is a step in the right direction. Overall, this trend is good, meriting an additional point in the Piotroski Analysis scoring.

Asset Turnover Ratio is growing?

What is the significance of comparing Asset Turnover between years for Norwegian Cruise Line Holdings (NCLH)?

The comparison of asset turnover year-over-year is crucial for assessing how effectively Norwegian Cruise Line Holdings (NCLH) utilizes its assets to generate revenue. Asset Turnover Ratio is calculated as revenue divided by average total assets. It provides insight into the efficiency of the company's asset use in creating sales. A rising trend in the Asset Turnover Ratio indicates enhanced efficiency. This is particularly important for capital-intensive enterprises like cruise lines, as it reflects better management and deployment of their significant asset base.