In preparation for NCLH's FQ4 2013 earnings release Tuesday, we’ve put together the recent pertinent forward looking company commentary.
NEW SHIP PREMIUMS
- Breakaway operates a healthy premium to both ticket pricing and onboard spend
- The new ships are pricing at about a double-digit premium to the Epic, and the Epic has been pricing at a double-digit premium to the rest of the fleet.
- Looking to 2014, expect adjusted net cruise cost excluding fuel to stabilize and decrease in the range of 1% to 2%, as NCLH return to our more normalized dry-dock schedule and new build launch expenses roll-over year-over-year.
- Expect earnings to grow approximately 60% in the coming year.
- The first quarter is booked a little bit behind. There is a couple of reasons for that. One being that the Easter break, which is a big time off especially in the Northeast is toward the end April this coming year versus it was March 31 for 2013. So, that booking momentum has changed a little bit into the second quarter.
- Solid pricing for 1Q. Pricing is above the mid single digits.
- Something that hopefully begins with a 4%, whether it's a low-4s or the mid-4s, it's too early to say
- In the first couple of quarters in the Caribbean, we have a healthy pricing environment right now
- It is a little bit more promotional.
- Pricing has been a positive. Feeling pretty good about Europe right now.
- Mid single-digit range is a fair assumption
- Fourth quarter starting out is strong...has exceeded our expectations. Feel very confident with our onboard revenue.
Takeaway: UA execs are swallowing Tylenol.
- "These suits—designed by apparel sponsor Under Armour and billed before the Games as a competitive advantage—have a design flaw that may be slowing down skaters, according to three people familiar with the U.S. team."
- "Vents on back of the suit, designed to allow heat to escape, are also allowing air to enter and create drag that keeps skaters from staying in the low position they need to achieve maximum speed, these people said. One skater said team members felt they were fighting the suit to maintain correct form."
Key Takeaway from Hedgeye Retail Analyst Brian McGough
Talk about a tough break for UnderArmour. When an athlete in any sport fails to win, it's an easy target to blame the equipment. Are the claims here valid? Possibly. But at this point, that's pretty much irrelevant. All a brand needs is for elite athletes to point a finger, accuse the product of being to blame, and the brand is going to end up with a public relations problem.
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Weight Watchers plummets over 25%... Worst day on record... Hedgeye called it.
Check out the video below from two weeks ago. Analysts Hesham Shaaban and Tom Tobin explained why WTW was a top Hedgeye SHORT.
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Client Talking Points
The buck continues to burn. It's down -1.5% in the last 2 weeks after failing our Hedgeye TAIL risk resistance of 81.17 US Dollar Index. Don’t confuse the inflation embedded in that (CRB Index new highs this morning at +4.6% year-to-date) as growth. It's great for Utilities (XLU), but brutal for Consumers (XLY and XLP).
Ohh baby does Gold love US #GrowthSlowing. Dollar Down + Rates Down = Gold up +8.8% year-to-date! That was 2011 and that’s Q1 of 2014. Beta chasers are going to get smoked not learning the Q1 2011 lesson. Variance at both the US stock and sector and level is starting to rip.
What's that? $1.37 Euro and $1.67 Pound versus the US Dollar? Unlike US economic growth slowing on the margin, European growth actually continues to accelerate. People who claim a strong currency is “bad for Germany” certainly don’t have any economic (and/or European growth equity return) data to support that.
|FIXED INCOME||15%||INTL CURRENCIES||15%|
Top Long Ideas
We remain bullish on the British Pound versus the US Dollar, a position supported over the intermediate term TREND by prudent management of interest rate policy from Mark Carney at the BOE (oriented towards hiking rather than cutting as conditions improve) and the Bank maintaining its existing asset purchase program (QE). UK high frequency data continues to offer evidence of emergent strength in the economy, and in many cases the data is outperforming that of its western European peers, which should provide further strength to the currency. In short, we believe a strengthening UK economy coupled with the comparative hawkishness of the BOE (vs. Yellen et al.) will further perpetuate #StrongPound over the intermediate term.
Darden is the world’s largest full service restaurant company. The company operates +2000 restaurants in the U.S. and Canada, including Olive Garden, Red Lobster, LongHorn and Capital Grille. Management has been under a firestorm of criticism for poor performance. Hedgeye's Howard Penney has been at the forefront of this activist movement since early 2013, when he first identified the potential for unleashing significant value creation for Darden shareholders. Less than a year later, it looks like Penney’s plan is coming to fruition. Penney (who thinks DRI is grossly mismanaged and in need of a major overhaul) believes activists will drive material change at Darden. This would obviously be extremely bullish for shareholders and could happen fairly soon driving shares materially higher.
Three for the Road
TWEET OF THE DAY
The government has been very successful in convincing lemmings that there's no inflation @KeithMcCullough
QUOTE OF THE DAY
There is giant untapped potential in disagreement, especially if the disagreement is between two or more thoughtful people. -Ray Dalio
STAT OF THE DAY
Gold futures pushed higher in electronic trading Friday, trading at the highest levels since November. Gold for April delivery jumped $16.70, or 1.3%, to $1,316.70 an ounce, adding to a $5.10 gain Thursday on the Comex division of the New York Mercantile Exchange.