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Steiner Couldn't Be Finer

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Beating the market is a breeze for Steiner Leisure (Nasdaq: STNR  ) . The spa operator has clocked in with better-than-expected quarterly profits in 22 of the past 26 periods. Absolutely trouncing the market, on the other hand, is a rare sight, so I hope you had your cameras out last night.

Steiner posted a profit of $0.89 a share in its latest quarter, blowing away both the $0.68 a share it earned a year ago and the $0.72 a share that Wall Street was betting on. The company was helped by a few tailwind factors, including a currency gain and a healthy reduction in shares outstanding, but Steiner still would have soundly thumped those targets on a neutral playing field.

Revenue inched just 3% higher to $144.7 million, in line with analyst expectations.

Most of Steiner's spas are on cruise ships, including 133 Steiner spas on the largest vessels in the fleets of Royal Caribbean (NYSE: RCL  ) , Carnival (NYSE: CCL  ) , NCL, and Disney (NYSE: DIS  ) . It also runs 48 resort spas for hoteliers like Hilton and Marriott (NYSE: MAR  ) , but the cruise ships provide far more revenue and give Steiner its biggest competitive advantage. Even when companies like Princess have tried an in-house approach to manage a spa, they find themselves ultimately hooking up with Steiner again. This is a demanding business, requiring a deep bench of spa technicians to cope with the turnover. Steiner has that. It even runs a few spa training schools, which is ideal for scouting out prospective seaworthy hires.

Steiner is actually the smooth way to ride out the cruising industry. Royal Caribbean posted earnings earlier this week -- a mixed bag of fluctuating fuel costs and demand for advance bookings. Companies like Royal Caribbean and Carnival will have their ups and downs, as they discount to attract passengers during lean times and mark up their fares when demand is high. Either way, they'll fill their boats, and that's all that really matters for Steiner.

A tight economy may slow down spending on spa treatments and offshore excursions, but sometimes passengers who get a great deal on a cabin will go ahead and spend more once they're on the ship.

The healthy quarter now prices Steiner -- a longtime Rule Breakers recommendation -- at less than eight times trailing earnings. The company isn't issuing guidance, but even if it simply treads water at this point, it's a compelling value.

Other ports of call for your noggin:

If you want to read Rick's original buy report for Steiner, and all of the updates along the way, take advantage of a 30-day guest pass to the Motley Fool Rule Breakers service. Disney and Royal Caribbean are Stock Advisor picks.

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. Rick 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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