Frank & Steiner

If you've ever kneaded your knots while you needed nautical knots, you probably know Steiner Leisure's (Nasdaq: STNR  ) handiwork.

Pardon the pun. Heck, pardon all of them.

The cruise-ship spa operator sailed into this week's earnings report with plenty to prove. After beating Wall Street's profit targets in 19 of the 20 previous quarters, Steiner missed analysts' second-quarter expectations.

Would it regain its winning ways or sink again? Well, it met investors in the middle. Revenue climbed 11% to $140.4 million. Earnings came in flat at $11.4 million, though an ambitious share-repurchase plan hacked away at the share count, inflating earnings $0.68 per share after a $0.66-per-share showing a year ago.

The market was looking for a profit of $0.68 a share on $136.7 million in revenue. Beating on the top? Simply meeting on the bottom? Let's see if we can track down the line item that tripped up the pros.

Found it! Administrative expenses climbed 21% during the period. This does not mean that the company is trying to disguise salary hikes through share repurchases, though Fools should keep an eye on that in future quarters.

Beyond that, Steiner continues to coast along nicely. It's now the spa operator on 132 cruise ships. It's lost a resort-hotel gig, but the landlubber business is small-fry stuff for the company. Steiner's feast is in the more lucrative floating spas, where it's practically the only way to go for the major cruise lines.

Some have tried to make it on their own, only to return to Steiner. It's just too demanding to run -- and staff -- a quality spa, given the rigors of marine travel. So it's no surprise to see that Carnival (NYSE: CCL  ) , Royal Caribbean (NYSE: RCL  ) , NCL, and Disney (NYSE: DIS  ) all hand over the biggest ships in their fleets to Steiner.

The future will get even brighter. Disney is expected to double its fleet over the next few years, while European shipyards are busy building gargantuan vessels to expand the fleets of Carnival and Royal Caribbean.

In the end, you're cheating yourself if you're not exploring the travel industry for investing ideas. Even with a dicey economy, folks need to get away once in awhile. That's kept timeshare operators like Bluegreen (NYSE: BXG  ) and Wyndham's (NYSE: WYN  ) Trendwest afloat through the real estate development debacle.

Would I love to see Steiner get back on the massage table and pound the living daylights out of Wall Street's profit targets? You bet. That would be aromatherapy to my pores. Until that day, though, I'm comfortable in knowing that Steiner -- a stock that has more than doubled since I recommended it to Rule Breakers newsletter subscribers three years ago -- is getting the job done, needing naught but kneading knots.

Fool Ahoy:

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