Critical Analysis: Norwegian Cruise Line (NCLH) vs. Hilton Grand Vacations (HGV)

Norwegian Cruise Line (NASDAQ: NCLH) and Hilton Grand Vacations (NYSE:HGV) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, institutional ownership, valuation, dividends, earnings and profitability.

Risk and Volatility

Norwegian Cruise Line has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, Hilton Grand Vacations has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500.



Insider and Institutional Ownership

88.9% of Norwegian Cruise Line shares are owned by institutional investors. 1.0% of Norwegian Cruise Line shares are owned by company insiders. Comparatively, 0.7% of Hilton Grand Vacations shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and target prices for Norwegian Cruise Line and Hilton Grand Vacations, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Norwegian Cruise Line 1 3 12 0 2.69
Hilton Grand Vacations 0 1 6 0 2.86

Norwegian Cruise Line presently has a consensus target price of $64.85, suggesting a potential upside of 24.80%. Hilton Grand Vacations has a consensus target price of $47.40, suggesting a potential upside of 28.00%. Given Hilton Grand Vacations’ stronger consensus rating and higher possible upside, analysts clearly believe Hilton Grand Vacations is more favorable than Norwegian Cruise Line.

Profitability

This table compares Norwegian Cruise Line and Hilton Grand Vacations’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Norwegian Cruise Line 13.91% 16.97% 6.16%
Hilton Grand Vacations 18.28% 45.63% 7.46%

Earnings and Valuation

This table compares Norwegian Cruise Line and Hilton Grand Vacations’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Norwegian Cruise Line $4.87 billion 2.40 $633.08 million N/A N/A
Hilton Grand Vacations $1.71 billion 2.10 $327.00 million $1.97 18.80

Norwegian Cruise Line has higher revenue and earnings than Hilton Grand Vacations.

Summary

Norwegian Cruise Line beats Hilton Grand Vacations on 7 of the 12 factors compared between the two stocks.

About Norwegian Cruise Line

Norwegian Cruise Line Holdings Ltd. (NCLH) is a global cruise company. The Company operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. The Company had 25 ships with approximately 50,400 Berths, as of May 1, 2017. The Company’s brands offer itineraries to various destinations around the world, including Europe, Asia, Australia, New Zealand, South America, Africa, Canada, Bermuda, Caribbean, Alaska and Hawaii. The Company’s brands offer various features, amenities, and activities, including various accommodations, multiple dining venues, bars and lounges, spa, casino and retail shopping areas and various entertainment choices. All the brands offer a selection of shore excursions at each port of call, as well as hotel packages for stays before or after a voyage. As of December 31, 2016, its Norwegian offered 14 ships that were purpose-built to deliver the Freestyle Cruising product, which offered freedom, flexibility and choice to its guests.

About Hilton Grand Vacations

Hilton Grand Vacations Inc., a timeshare company, develops, markets, sells, and manages timeshare resorts primarily under the Hilton Grand Vacations brand. The company operates in two segments, Real Estate Sales and Financing; and Resort Operations and Club Management. It sells vacation ownership intervals; manages resorts; operates a points-based vacation club; and finances and services loans provided to consumers for their timeshare purchases. The company also manages and operates the points-based Hilton Grand Vacations Club and Hilton Club exchange programs, which provides exchange, leisure travel, and reservation services to approximately 288,000 members, as well as engages in the rental of inventory made available due to ownership exchanges through its club programs. As of December 31, 2017, it had 48 resorts comprising 8,102 units located in the United States and Europe. Hilton Grand Vacations Inc. was founded in 1992 and is headquartered in Orlando, Florida.

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