I miss the old Steiner Leisure (Nasdaq: STNR).
Don't get me wrong. The cruise ship spa operator is doing several things right. It's also trading at just 13 times trailing earnings and 12 times this year's projected profitability, an amazing bargain for a company that dominates a promising niche.
However, by earning $0.67 a share in its latest quarter, Steiner is simply matching Wall Street's profit targets. If you're new to Steiner, you may point out that Steiner hasn't lapped analyst profit targets for three consecutive quarters.
I know. The problem is that I'm spoiled. Before the current ho-hum streak, Steiner had topped estimates in 19 of the previous 20 quarters.
Steiner is doing many things well. Revenue climbed 11% higher, to $135.2 million. It now watches over the floating spas in 130 ships, with a presence on the fleets of the industry's biggest names like Carnival (NYSE: CCL), Royal Caribbean (NYSE: RCL), NCL, and Disney (NYSE: DIS). The average revenue per staff member also bumped up, indicating that even economically pinched passengers aren't skimping on pampering.
I guess I expected the company to mystify the pros. Steiner feels pretty mortal these days.
Investors aren't warming up to the cruise ship industry these days. Carnival, Royal Caribbean, and Steiner are all trading at 10-12 times next year's consensus income estimate.
Cheapness may be contagious in the hospitality sector, with hoteliers such as InterContinental (NYSE: IHG) and Wyndham (NYSE: WYN) and time-share specialist Bluegreen (NYSE: BXG) trading at ridiculous preteen multiples on next year's earnings.
So why am I taking the mortality so personally? Well, Steiner was the first stock that I recommended to Rule Breakers newsletter subscribers three years ago.
The stock is up more than 50% since then, doubling the S&P 500's piddling return in that time. Sure, it's beating the market. It's just that I was happier when Steiner was beating the market on a quarterly earnings basis, too.
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