Is NCLH Cheap Enough to Buy Despite Its Earnings and Leverage Risks?

NCLH's Valuation Discount Looks Deep

NCLH's forward 12-month price-to-sales ratio is 0.78, below its five-year median of 0.87 and well below the Zacks sub-industry's 2.90. The gap leaves the stock looking inexpensive on sales.

That discount sits alongside weaker relative share performance. NCLH has declined 27.9% over the past year, while the Zacks sub-industry has gained 1.3% over the same period.

NCLH's 2026 Earnings Reset Limits the Appeal

The Zacks Consensus Estimate for 2026 earnings is $1.50 per share, down from $2.11 in 2025, a 28.9% decline. The 2026 estimate has also fallen 6.8% over the past four weeks.

Management expects 2026 constant-currency net yield to decline about 5%. Net yield trends are also expected to remain negative in the first half of 2027, primarily because of the first quarter, before improving sequentially.

Norwegian Cruise's Leverage Narrows Its Margin for Error

At June 30, 2026, Norwegian Cruise had $15 billion of debt, $14.8 billion of net debt and $1.5 billion of liquidity. Net leverage stood at 5.3 times and is expected to exceed 6 times by year-end.

Debt repayments include $1.106 billion in 2027, $1.341 billion in 2028, $1.365 billion in 2029 and $3.950 billion in 2030. Gross newbuild and growth capital spending is projected at about $2.9 billion in 2026, or $1.4 billion net of financing.

NCLH's Cost Savings Can Cushion the Reset

Management announced $225 million of annualized savings during the first two quarters of 2026. Run-rate savings exceeded $525 million as of July, reflecting actions across technology vendors, salaries and benefits, selling, general and administrative expenses and capital efficiency.

For 2026, adjusted net cruise cost excluding fuel per capacity day is expected to decline about 0.25% on a constant-currency basis. The cost actions support margins, but current guidance indicates they will not fully offset weaker near-term revenue generation.

Norwegian Cruise Still Has Long-Term Demand Levers

Regent Seven Seas Cruises and Oceania Cruises target higher-spend guests, supporting NCLH's premium mix. The company also has 16 ships on order through 2037 that are expected to add roughly 43,000 berths, while revenue-management upgrades and Great Stirrup Cay investments provide additional demand levers.

Cruise peers provide useful demand context. Carnival Corporation CCL reported record second-quarter 2026 revenues of $6.7 billion and constant-currency net yields up 2.2%. Royal Caribbean Group RCL reported $4.8 billion of second-quarter revenues and raised its 2026 adjusted EPS guidance to $17.73 to $17.87.

NCLH's Mixed Signals Support Caution

The bottom line is that NCLH's low sales multiple offers a value case, but the 2026 earnings reset and elevated leverage leave less cushion if the commercial recovery takes longer than planned. The setup favors patience rather than treating the discount alone as a buy signal.

NCLH currently carries a Zacks Rank #5 (Strong Sell), reflecting unfavorable earnings estimate revision trends over the short term. Its Value Score of A highlights valuation appeal, but the Growth Score of D, Momentum Score of C and VGM Score of C keep the broader profile mixed. Under the Zacks framework, Style Scores complement the Zacks Rank rather than override it.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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