The last few years have been quite an adventure for travel company Lindblad Expeditions (NASDAQ:LIND), as the pandemic and the slow recovery of the travel industry have not created a conducive environment.
However, travel is now back to pre-pandemic levels and then some, and the company, which offers expedition cruises and adventure travel experiences, is starting to see results. The beaten-down stock trading at around $6.70 per share has the potential to set sail, based on recent trends and anticipated growth in the travel market. Let’s take a look to see if this stock is a good deal.
Adventure travel is booming
Lindblad became a public company in 2015, but it has been leading expeditions to Antarctica and the Galapagos Islands for almost 60 years. Now its cruise ships sail around the world to far-off, adventure destinations that the more mainstream cruise lines don’t go.
Lindblad, which has a partnership with National Geographic, is one of the originators and one of the largest and most well-known names in this niche. Analysts say this market is expected to take off due to pent-up demand and a growing segment of the population that has traveled extensively and wants to expand their horizons.
According to Grand View Research, the global adventure travel market is expected to grow at a compound annual growth rate (CAGR) of 15.2% between now and 2030.
Further, Truist (NYSE:TFC) analyst Patrick Sholes said in September that demand is outpacing supply in the overall cruise industry. Specifically, he said in a research note that sales for 2024 are up some 55% to 60% over pre-pandemic 2019 levels, while sales for 2025 are trending 100% higher than 2019. Meanwhile, new supply is only at about 20% to 25% over pre-COVID levels.
Lindblad is seeing this growth in its numbers as it posted record third-quarter revenue, which jumped 22% to $176 million. Net income was $4.5 million, or 8 cents per share, up from a net loss of $9.8 million a year ago, while adjusted EBITDA was $34 million, up 83% year over year. Overall, Lindblad’s bookings in 2023 are up 42% from 2019 levels as of Oct. 30.
For the full-year 2023, Lindblad expects $550 million to $575 million in tour revenue, which would be up from $421 million in fiscal 2022. Adjusted EBITDA is projected to be between $70 million and $80 million for the full year, up from an $11.5 million loss in 2022.
Clear sailing ahead?
The long-term, industry-wide trends for cruises in general and adventure expeditions more specifically are promising, as noted, but there are some potential headwinds ahead for the fourth quarter.
War and geopolitical strife could have an impact on travel, especially in Egypt, which is one of Lindblad’s destinations. The State Department issued a “reconsider travel” warning in July for parts of Egypt, specifically, the Sinai Peninsula, the Western Desert, and border areas. In fact, things have certainly gotten more dangerous in that part of the world since.
The other potential headwind is the impact of fuel prices, should they increase. On the earnings call, Chief Financial Officer Craig Felenstein said cancellations for Q4 travel have been relatively minimal but ahead of 2019 levels.
As for 2024, Felenstein said sales are a little behind where they were at this point in 2023, adding that there was more pent-up demand for 2023 from people who had cancelled trips in 2021 and 2022. That has leveled off. Obviously, war and fuel prices are two big variables next year as well.
“We’re closing that gap every single week, and we expect to be in really good shape as we head into 2024. We have not seen any real impact yet other than the cancellations from Egypt with regards to what’s going on in the world. The booking window for next year remains pretty consistently in that nine… averaging at nine-month window when people are booking, so no real change yet. Obviously, we don’t know if that continues but today, we’re not seeing any impact,” the CFO said on the call.
The longer-term picture is much better for Lindblad, as it has a consensus Buy rating among analysts and a median price target of $15 per share, which would be more than double its current price. It is also pretty cheap with a price-to-sales ratio of just 0.65.
There could be some short-term volatility, so you may want to see how the company does in Q4, but over the long term, there is a lot to like about Lindblad.
