Steiner Aims to Pamper Your Portfolio

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Perfectly trained fingers can massage your worries away, ease the crick out of your neck, and turn profit dips into gains.

That's pretty much what Steiner Leisure (Nasdaq: STNR) did last night, using an aggressive share buyback to turn a 9% dip in profitability into a slight gain on a per-share basis.

It's not sneaky. It's just plain smart.

The cruise ship spa operator grew its top line by 5% to $135.7 million, which is no small feat in this penny-pinching climate. Still, I expected better. Last week found Royal Caribbean (NYSE: RCL) -- one of the many cruise lines that hand over their floating spas to Steiner -- posting a sharp drop in profitability, but a 7% gain in revenue. Onboard revenue actually outpaced ticketing revenue at Royal Caribbean, leading one to believe that things like spa treatments and shore excursions were growing more impressively than the 5% gain Steiner reported last night.

All the same, I'll take that 5%; it's good to see Steiner back on track. Steiner is the first stock that I recommended to Motley Fool Rule Breakers newsletter subscribers four years ago, early in its inspiring run of topping estimates in 19 quarters within a 21-quarter stretch. Then Steiner proved human, simply meeting expectations for two straight quarters. Now the company's in a winning groove again, coming out on top after blowing past the pros three months ago.

Steiner currently runs 133 onboard spas for industry titans like Royal Caribbean, Carnival (NYSE: CCL), NCL, and Disney (NYSE: DIS). It also runs resort spas for hoteliers like Hilton and Marriott (NYSE: MAT), but its cruise-ship presence gives it a unique moat in an otherwise competitive industry.

The company's second-quarter report wasn't amazing. I don't like the dip in net income, nor the drop in the "revenue per staff per day" metric, which has typically inched higher. However, between the growing popularity of its Elemis spa products and its presence in an industry that will bounce back nicely when the economy does, Steiner can keep working those fingers until most of my worries float away.