Steiner Leisure Limited (NASDAQ:STNR)
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The Company is a worldwide provider of spa services and products.
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The Company is a worldwide provider of spa services and products.
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Steiner Leisure founded way back in mid 30’s, is a leading worldwide provider of Spa products and services. The company prime businesses being services, products and schools segment. The services segment contributes around 60% to the over all tally and primarily focuses on operation of Spa’s in Spa resorts and in more than hundred cruise ships. The rest of the revenues are generated by Products segment, which offers high quality beauty products under Elemis and La Therapie brands. Steiner also owns and operates schools to train spa professionals. With recent acquisition of Utah vocational schools this segment has the potential to be a major contributor in the coming year.
The company has seen a consistent good run, with average weekly revenues on the cruise rising by over 8% when compared to last years revenue, along with superior performance of the products segment due to selling of Steiner products in many of Nordstrom’s stores across US and UK. The stock price also has followed the appreciating trend, rising by over 25% year till date.
Steiner appears to carry forward its growing trend, even in the coming year. As its Product segment continue to look strong with possibility of originating export business outside the core markets of the US and UK. Moreover, additional Nordstrom stores are expected to start selling Steiner products along with sales through company-operated spas, which have seen a double-digit growth. Finally, additions of new cruises are expected to fuel the growth going forward. Steiner’s latest acquisition of Utah school will start generating returns with well-anticipated higher margins. Endorsing the same, along with company’s recent foray into Middle East market through Monarch Hotel in Dubai, the stock price can move northwards.
Steiner Leisure has observed a strong performance, for the fiscal year ended 31 December 2006; its revenues were up 18% to $470.1 mn. The top line upsurge can be attributed to strong growth in products and services segments. Net income from continuing operations also registered a rise of 14% to $45.9 mn. However the rise in cost of services, higher administrative expenses, salary and payroll taxes partially affected the bottom line.The company’s main revenue earners have been the inflows from services segment. It recently entered into an agreement with Windstar Cruises to serve two additional vessels, Wind Star and the Wind Spirit, in addition to Wind Surf, which the company is currently serving. Such agreements are very beneficial for the future prospects of the company, as they are usually for a longer duration and generate a certain amount of fixed cash flow. Steiner also announced agreement with MSC Cruises and Ritz-Carlton, Palm Beach, during the first quarter of 2007.The stock of Steiner observed a strong slump recently with the price falling by over 10% in matter of couple of weeks, as company’s forecasted earnings for the first quarter 2007, fell below Wall Streets expectations. However the agreement with Windstar, has bought the stock closer to its previous levels. Going ahead, the fundamental of the Steiner look solid, as the company has achieved a strong niche for its products and services. Moreover, with various long term agreements underway it will be possible for the company to deliver a strong and consistent performance over a period of time, making Steiner a good bet for a long term investor.