Looking at the headline print, nothing would really suggest that NCLH stock deserves such a steep correction. Yes, third-quarter revenue of $2.9 billion missed analysts' consensus target of $3.02 billion. However, this tally represented a 5% year-over-year lift and was a record performance. Further, adjusted earnings per share of $1.20 beat the consensus target of $1.16, along with company guidance of $1.14.
So, what caused the turmoil in NCLH stock? Likely, the culprit was EPS guidance for the fourth quarter, which was adjusted to 27 cents and thus below the 30-cent estimate. Unfortunately, management had to guide down profit expectations due to cost uncertainties and weakening consumer demand.
Interestingly, in late August, I wrote about Norwegian, specifically drawing attention to its heavily accumulative quantitative structure. At the time of publication, NCLH stock had printed eight up weeks and two down weeks, with an overall upward slope, a sequence I abbreviated as 8-2-U.
Primarily, the argument was that, based on past analogs, NCLH stock historically has failed to sustain such robust momentum. Subsequently, I worried that the security could correct, and it did just that. Sadly, the corrective pressure arrived much later than the data suggested it would, meaning that the underlying trading ideas failed.
However, what I find encouraging is that, at the time of publication, I noted that NCLH stock could drop to $18.08 to $18.66 at the conclusion of the next 10 weeks. That would put it right around today.
If you've ever wondered about the viability of the quantitative approach, this is it. I'm bringing the receipts as the kids like to say. No, I ...
