What happened

Shares of Norwegian Cruise Line Holdings (NCLH 1.41%) sank 11.6% through 11:40 a.m. ET after the company reported a big earnings miss on Tuesday morning.

Even heading into Q4, analysts weren't very optimistic, forecasting that the cruise operator would lose $0.85 per share, pro forma, on $1.5 billion in revenue. But Norwegian missed even this pessimistic prediction. While sales were on target, losses per share tumbled to $1.04.

So what

Worse, those losses -- the $1.04-per-share number -- were adjusted for items considered one-time in nature. When calculated according to generally accepted accounting principles (GAAP), Norwegian's per-share loss was even bigger: $1.14 per share, despite revenues more than tripling year over year and "revenue per Passenger Cruise Day" growing 23% in comparison to the prepandemic year 2019 (and thus coming in better than expected).

On the plus side, while still technically unprofitable, Norwegian Cruise did succeed in turning free-cash-flow positive in the quarter, generating cash profits of "approximately $71 million" in the quarter, according to management.

Now what

Now admittedly, Norwegian Cruise Line still burned cash for the year. Over all of 2022, the company's cash flow statement shows a rate of about $1.6 billion for the year -- but even that was only half the $3.2 billion in cash Norwegian burned in 2021.

What's more, analysts are forecasting that Norwegian will turn the corner on profitability this year and on free cash flow next year. According to the latest estimates, 2023 will see Norwegian earn $0.87 per share (GAAP) this year and generate positive free cash flow of nearly $630 million in 2024.

But that could be a problem.

Norwegian Cruise line itself, you see, isn't quite as optimistic as its analysts seem to be. Giving guidance for the first quarter of 2023, currently underway, management is forecasting a pro-forma loss of $0.45 per share. (Wall Street only wants to see a $0.33-per-share loss.) And for the full year, Norwegian's prediction of $0.70 per share (pro forma) likewise falls well short of consensus predictions.

Assuming Norwegian's own managers know their business better than Wall Street does -- which seems like a safe assumption -- it would appear that Norwegian won't be nearly as profitable as analysts hope or turn profitable quite as soon as analysts have predicted.

No wonder investors are disappointed.