I miss the old Steiner Leisure
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
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
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.
For more Foolishness:
To read Rick's original buy report for Steiner and all the updates along the way, take advantage of a 30-day guest pass for a trial subscription of the Motley Fool Rule Breakers service. Disney and Royal Caribbean are Motley Fool Stock Advisor newsletter recommendations. InterContinental Hotels is a Global Gains pick.
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 Steiner spa treatments on the Disney Magic. He does not own shares in any companies in this story except 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 SCUBA-certified disclosure policy.