The experience-driven expedition cruise market, although smaller than the luxury segment, has grown 450% over the last decade based on passenger capacity. In comparison, the luxury cruise market has only grown 119% since 2012.

As more and more adventurous cruisers abound, let's take a closer look at Lindblad Expeditions (LIND 1.38%), an expeditionary cruise company that saw sales more than double last quarter. Based on Lindblad's recent performance and future outlook, is the stock currently a buy?

Delivering adventure, one voyage at a time

Lindblad Expeditions transports passengers on ship-based voyages across the world. The New York City-based company has also partnered with National Geographic to "produce innovative marine expedition programs and promote conservation and sustainable tourism around the world." Guests on Lindblad expeditions are accompanied by scientists, naturalists, and researchers who enrich the travel experience.

Total revenue for the third quarter more than doubled year over year, landing at nearly $145 million. What's more impressive, however, is that the third quarter of 2022 outperformed the same quarter in 2019 by over 43% from a revenue standpoint. Lindblad CFO Craig Felenstein cited a "growing audience for high-quality adventure travel" as a primary tailwind.

Although revenue was far above 2019 levels, occupancy in the third quarter reached a mere 81% compared to 2019's Q3 occupancy of 94%. This is encouraging for both Lindblad and its investors, since the potential for growth appears massive. As Felenstein explained during the Q3 earnings call, "you can see the revenue opportunity we have across the expanded fleet as we grow occupancy levels and increase yields."

Lindblad's newest ship, the National Geographic Islander 2, launched in August and marks the newest addition to its ever-growing fleet. Not only are strategic fleet expansion efforts already delivering strong results, they significantly increase earning potential from pre-pandemic levels. And ship-based revenue isn't Lindblad's only weapon. Q3's land experiences revenue, derived from non-cruise ecotourism and adventure travel spanning the globe, nearly doubled year over year. 

High revenue, low profitability

Despite remarkable revenue growth, Lindblad posted a net loss of nearly $5.5 million for the quarter. In comparison, 2019's third quarter enjoyed a $2.7 million profit. So profitability is clearly a sticking point for the adventure tourism company.

Higher fuel costs, supply chain headwinds, and inflation have all dragged on Lindblad's performance in recent months. While increasing occupancy is the company's main focus, profit margin has also taken center stage as Lindblad seeks a return to profitability. Undeterred by current margin levels, Felenstein suggested "significant opportunity" to expand margins beyond 2019 levels.

Since Lindblad's average booking window is nine months prior to a trip's departure, occupancy should be considered a lagging indicator here. With occupancy already at 81%, this venturesome cruise operator should start showing better occupancy in future quarters. In the meantime, profitability should also increase with an expected easing of fuel and supply chain expenses.

Is Lindblad stock a buy?

Confident about the year ahead, Lindblad CEO Dolf Berle cited bookings that are 23% ahead of the same point in 2019. And the company continues to accelerate marketing and booking efforts.

Since Lindblad is an outlier among cruise companies, with a much smaller market capitalization than other cruise stocks, let's compare its price-to-sales ratio to Royal Caribbean's to get a better idea of relative performance.

Metric Lindblad Expeditions Royal Caribbean
Market cap $475 million $15.2 billion
Price-to-sales ratio 1.63 2.11

Data source: E*Trade, company reports.

Since a lower price-to-sales ratio is better, Lindblad Expeditions makes a better buy at the moment than Royal Caribbean -- which I'm also bullish on. And after nine straight quarters of operating losses, Lindblad finally posted an operating profit in Q3. For these reasons, I consider Lindblad stock a buy at its current price levels.