Does The Recent Sell Off And Falling Crude Oil Prices Make Norwegian Stock A Buy?

NCLH: Norwegian Cruise Line logo
Norwegian Cruise Line

Norwegian Cruise Line (NYSE:NCLH) stock has declined by close to 10% over the last month (about 21 trading days), underperforming the broader S&P 500 which remained roughly flat over the same period. There have actually been several positive developments for Norwegian, including a strong recovery in cruising demand with occupancy levels on the company’s cruises reaching about 82% of pre-pandemic levels over Q3 2022. The recent decline in crude oil prices from over $95 per barrel in mid-November to about $78 per barrel currently, will also potentially prove a tailwind for the company, as fuel accounts for roughly 10% of its overall operating expenses. That said, mounting economic headwinds and continued rate hikes from the Fed could weigh on cruising demand in the medium term. Moreover, the company’s CEO and CFO sold a total of about 83,000 shares last month for a total consideration of $1.5 million and this could also be weighing on the stock.

However, now that NCLH stock has seen a decline of about 10% over the last month, will it continue its downward trajectory in the near term, or is a rebound imminent? Going by historical performance, there is a roughly 67% chance of a rise in Norwegian stock over the next month. Out of 355 instances in the last ten years when Norwegian Cruise Line (NCLH) stock saw a trailing 21-day drop of 9.4% or more, 237 of those instances resulted in NCLH stock rising over the subsequent one-month period. This historical pattern reflects 237 out of 355, or about a 67% chance of a rise in Norwegian Cruise Line stock over the next month. See our analysis on  Norwegian Stock Chance of A Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using the last ten years data

  • After moving -4.5% or more over five days, the stock rose in the next five days on 57% of the occasions.
  • After moving -2.7% or more over ten days, the stock rose in the next ten days on 53% of the occasions
  • After moving -10% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 67% of the occasions.

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 Returns Dec 2022
MTD [1]
YTD [1]
Total [2]
 NCLH Return -6% -25% -64%
 S&P 500 Return -2% -16% 78%
 Trefis Multi-Strategy Portfolio -2% -19% 221%
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[1] Month-to-date and year-to-date as of 12/12/2022
[2] Cumulative total returns since the end of 2016

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