Why OneSpaWorld Stock Is Up Today
Key Points
More cruise lines are partnering with OneSpaWorld.
The salon services provider plans to buy back $100 million of its stock.
- Motley Fool Issues Rare "Total Conviction" Buy Alert ›
Shares of OneSpaWorld (NASDAQ:OSW) spiked on Wednesday after the health and wellness center operator raised its dividend by 25%.
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More spas mean more profits for investors
OneSpaWorld's revenue rose 7% year over year to $276.5 million in the third quarter. The gains were fueled by newbuild-driven fleet expansion and higher guest spending.
OneSpaWorld provides rejuvenation, fitness, and aesthetic services on cruise ships and at resorts. The company operates health and wellness centers on 207 ships as of the end of the third quarter, up from 204 in the year-ago period.
The spa operator's asset-light business model is nicely profitable. Adjusted net income jumped 13% to $34.8 million, or $0.34 per share. That bested Wall Street's estimates, which had called for per-share profits of $0.31.
Rising cash returns for shareowners
These healthy results prompted OneSpaWorld to lift its full-year financial guidance. Management now sees full-year revenue rising by roughly 10% to over $1 billion. The company also guided for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to climb by 13% to about $139 million.
OneSpaWorld's strengthening profitability is enabling it to pay down debt while rewarding stockholders with share repurchases and a growing dividend stream.
The spa leader announced a new $100 million stock buyback program and a 25% boost to its quarterly dividend to $0.0625 per share, placing its forward yield at nearly 1%.
Should you buy stock in OneSpaWorld right now?
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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