5 Reasons Viking Is a Different Kind of Cruise Line Stock

Despite being one of the NFL's most winningest franchises, the Minnesota Vikings have never won a Super Bowl. Viking Holdings (NYSE: VIK), on the other hand, is winning it all in its market. Shares of the river cruise leader have nearly doubled over the past year.

Viking's 84% jump in that time is obviously beating the market. It's also crushing the competition. The other three publicly traded ocean cruise giants have posted gains of 11%, 2%, and a 6% decline over the past year. What makes Viking different? Let's dive into some of the reasons why the tide isn't raising all ships.

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1. A river runs through it

There's a big difference between a river cruise -- the niche that Viking dominates with more than half of the North American outbound market -- and the more common ocean liner itineraries. The lion's share of sailings for Carnival Corp., Royal Caribbean, and Norwegian Cruise Line are in the Caribbean, highlighting sandy beaches and tropical getaways.

Viking has a small presence in the ocean liner market, but most of its fleet consists of longships gliding along 21 different rivers across all seven continents. Viking's emphasis is on exploring antiquities, history, and destinations unreachable by larger vessels. No one packs snorkeling gear on a Viking river itinerary.

2. The vibe is different

Unlike the major cruise lines with ships that take on thousands of guests, Viking longships have a capacity of 190 passengers on 95 berths. Do the math, and it's a maximum of two guests in each room. Traditional cruise lines often offer discounts for third and fourth passengers sharing the same berth.

There are no family suites on a Viking longship. No one under 18 is even allowed on the ship. There are some niche ocean liners, including Virgin and Oceania, that also restrict sailing to adults, but Viking doesn't have the same policy, making it easier to police the casinos and nightclubs. There are no casinos on a Viking longship. The vibe is quieter, with an emphasis on education and destinations.

3. The clientele is older and wealthier

Now we start getting into why Viking has been crushing it as a business. It costs substantially more for one of its expeditions than the more mainstream offerings of the traditional operators. It costs roughly four times more for a weeklong Viking expedition than a weeklong Carnival cruise.

Pricing and the nostalgia of a luxury river cruise combine for a juicy target audience. In its prospectus from its IPO two years ago, Viking spells out its most relevant customer group:

English-speaking travelers aged 55 years old and over, who have the time, money and desire to explore the world.

With affluent and typically retired passengers, Viking's business can weather the economic storm better than other consumer-facing businesses. It's a winning recipe in today's climate.

4. Loyalty matters

A high-end Viking watery adventure may seem like a bucket list item, but folks keep coming back to the bucket. A little more than half of Viking passengers on any given sailing are repeat customers. It's a testament to the quality of Viking's product.

You pay up for a Viking sailing, but you're getting a lot. Passengers get a free excursion at every port of call, a big money maker for the rest of the industry. Viking also offers free Wi-Fi, spa access, and even beer or wine, along with soft drinks during lunch or dinner.

Viking has consistently ranked at the top, and it's why 92% of its capacity for its 2026 sailings was spoken for as of last month, when it posted blowout quarterly results. A healthy 38% of next year's capacity is already booked, ahead of the 37% it was at a year earlier for the following year's slate.

5. Margins remain strong

Cruise lines in general are growing. Royal Caribbean, Carnival, and Norwegian posted top-line gains between 6% and 10% for their latest quarters. Viking is laughing at the rearview mirror with its 18% first-quarter revenue jump.

The business gets even better as you work your way down the income statement. Viking became the first cruise line operator to return to positive operating income following the devastating COVID-19 crisis. It got there in 2022.

Viking's trailing net margin of 18% is impressive, well ahead of Carnival's 12% and Norwegian's 6%. Royal Caribbean is higher, but there's a reason why that cruise line operator commands the largest market cap in the industry.

Viking stands out as a luxury brand stock in the travel market. Even the announcement that founder CEO Torstein Hagen was stepping down last month -- something that could rattle investors in companies when successful longtime leaders move on -- didn't leave a dent. Viking is different, and investors are grateful.

Rick Munarriz has positions in Royal Caribbean Cruises and Viking. The Motley Fool has positions in and recommends Viking. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.