There's no point in massaging Steiner Leisure's (Nasdaq: STNR ) second-quarter numbers. It was a rare miss for a company that has typically blown past analyst targets with aplomb. The spa services provider for 131 of the largest cruise ships posted a profit of $0.67 a share. It had generated earnings of $0.61 per share during the same quarter a year ago. Revenues climbed 11% higher to $129.8 million.
Unfortunately, Wall Street was docked at the $0.69-per-share profit mark. This isn't something that Steiner investors are used to seeing. The company had beaten analyst profit targets in 19 of the past 20 quarters before last night's miss, and that lone exception found the company simply nailing Wall Street's estimate. You actually have to go all the way back to the third quarter of 2001 to find the last time that Steiner actually came up short.
So is that it? Run for the hills? Well, you'd want to wait until your floating spa anchors down at the nearest port before going that route, but your defection may be premature. This is a seasonally sleepy quarter in the cruising industry. Itineraries are often chopped up as cruise lines reposition their vessels, sending some ships away from the warm Caribbean waters to hit Alaska and the Mediterranean for spring and summer sailings up north.
Market leader Carnival (NYSE: CCL ) posted just a 9% gain in revenues during its second quarter, though Carnival's fiscal period ends in May instead of Steiner's June. Thankfully for Steiner, its margins weren't hit by the higher fuel prices that have dented profits at Carnival and Royal Caribbean (NYSE: RCL ) .
Buying Steiner at just 16 times this year's profit estimates may seem pricey if the bottom line disappointments continue, but there is a silver lining in the company's otherwise bland report. Daily revenue per cruise ship staff member -- a metric that that troubled me by dipping in each of the two previous quarters -- is growing again. Just as Carnival's report showed that onboard spending lapped passenger fares, it's good to see discounted berths give travelers more money to spend at sea.
The company gained a ship during the quarter, but lost two of the 54 land-based resort spas it watches over. That's fine. The landlubber business has never been as lucrative as the cruise ship business, where Steiner pretty much stands alone as the third-party provider of choice on Carnival, Royal Caribbean, and Disney (NYSE: DIS ) fleets.
As a stock that has doubled since it was tapped as a Rule Breakers newsletter selection three years ago, I hate seeing the miss. Then again, given the company's track record of bouncing back, I'd love to go through another six years of profits before seeing another bottom-line blunder.
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Longtime Fool contributor Rick Munarriz will never be confused with a metrosexual -- his shoes don't even match at the moment -- but he has taken in a pair of Steiner spa treatments on the Disney Magic. He does not own shares in any of the companies in this story, save for Disney. He is also part of the
Rule Breakers
newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
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