Top Cruise Line Stocks for Q1 2021

The cruise line industry is part of the broader travel and tourism industry, focused primarily on providing sea-based vacation experiences. Companies in the industry own and operate cruise ships in various destinations worldwide, offering a variety of itineraries and themed cruises. They also may provide other travel and vacation services. Some of the big cruise line companies include Carnival Corp. (CCL) and Norwegian Cruise Line Holdings Ltd. (NCLH). The cruise line industry has been severely negatively affected by the COVID-19 pandemic and related travel restrictions and other social-distancing measures. The pandemic is likely to continue to hurt the performance of these companies and their stocks in 2021.

Cruise line stocks have dramatically underperformed the broader market over the last year. They have provided total returns sharply below the Russell 1000’s total return of 21.2% over the past 12 months. This market performance number is as of December 11 and the statistics in the tables below are as of December 14.

Below, we look at the top 3 cruise line stocks with the best value, least sales decline, and strongest performance.

There are just 4 pure-play cruise line companies easily available to U.S. investors, but we look at them in our usual style. Because the entire industry has suffered losses in the most recent quarter, the value section below will be based on price-to-sales ratio rather than the usual price-to-earnings ratio (P/E Ratio).

Best Value Cruise Line Stocks

These are the cruise line stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in early stages of development or industries suffering from major shocks, price-to-sales can be substituted as a rough measure of a business’s value. The price-to-sales ratio shows how much you’re paying for the stock for each dollar of sales generated.

Source: YCharts

• Carnival Corp.: Carnival operates the world’s largest fleet of cruise ships. In addition to 100 vessels, the company also owns travel-related properties such as hotels and vacation destinations throughout the world. The company in December provided an update on its itinerary cancellations, including the canceling of cruise operations scheduled for February from Miami, Port Canaveral, and Galveston. Carnival said it is implementing plans for the resumption of cruising in 2021, though the company did not provide a timeline.
• Norwegian Cruise Line Holdings Ltd.: Norwegian Cruise Line operates a fleet of passenger cruise ships. The company offers various itineraries and theme cruises. In early December, the company announced that it was suspending all voyages through its Norwegian Cruise Line brand with embarkation dates from January 1 through February 28. of next year. The company also is suspending all voyages for its Oceania Cruises and Regent Seven Seas Cruises brands through March 31.
• Royal Caribbean Group: Royal Caribbean Group, formerly known as Royal Caribbean Cruises, operates a fleet of vessels in the cruise vacation industry. For Q3 2020, the company reported a net loss of $1.3 billion compared with net income of $0.9 billion one year prior. To boost liquidity, Royal Caribbean executed a convertible bond issuance and a common stock public offering, which together yielded $1.15 billion.

Cruise Line Stocks with the Least Sales Decline

These are the cruise line stocks with the least year-over-year (YOY) sales decline for the most recent quarter. A company’s ability to maintain sales in a difficult business environment can be a sign of good management and/or a strong business model. Cruise ship sales are currently plunging. But companies that post higher sales growth as the industry recovers may eventually produce more profit once they achieve, or return to, profitability.

Source: YCharts

• Lindblad Expeditions Holdings Inc.: Lindblad Expeditions owns and operates cruise ships, and provides expedition cruising and travel services. The company offers both sea-based and land-based expeditions. In Q3 2020, the company posted a net loss of $27.5 million, dramatically higher than the $0.5 million net loss in the same quarter a year earlier. Third quarter tour revenue plummeted by $100 million, or 99%. The company said it is taking several steps to boost liquidity and reduce costs to weather the continuing economic disruption from the pandemic.
• Carnival Corp.: See above for company description.
• Norwegian Cruise Line Holdings Ltd.: See above for company description.

Cruise Line Stocks with the Best Performance

These are the cruise line stocks that had the smallest declines in total return over the past 12 months out of the companies we looked at.

Source: YCharts

• Lindblad Expeditions Holdings Inc.: See above for company description.
• Royal Caribbean Group: See above for company description.
• Norwegian Cruise Line Holdings Ltd.: See above for company description.

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