What a time it’s been for Lindblad Expeditions. In the past six months alone, the company’s stock price has increased by a massive 43.7%, reaching $25.36 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is now the time to buy Lindblad Expeditions, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Do We Think Lindblad Expeditions Will Underperform?
We’re glad investors have benefited from the price increase, but we’re passing on Lindblad Expeditions for now. Here are three reasons why there are better opportunities than LIND, plus one stock we’d rather own.
1. Lackluster Revenue Growth
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new property or trend. Lindblad Expeditions’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 18.5% over the last two years was well below its five-year trend. 
2. Weak Operating Margin Could Cause Trouble
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Lindblad Expeditions’s operating margin has risen over the last 12 months and averaged 6.9% over the last two years. The company’s higher efficiency is a breath of fresh air, but its suboptimal cost structure means it still sports inadequate profitability for a consumer discretionary business.
3. Cash Flow Margin Set to Decline
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Over the next year, analysts predict Lindblad Expeditions’s cash conversion will fall. Their consensus estimates imply its free cash flow margin of 13.1% for the last 12 months will decrease to 9.3%.
Final Judgment
Lindblad Expeditions doesn’t pass our quality test. After the recent surge, the stock trades at 99.7× forward P/E (or $25.36 per share). This valuation tells us a lot of optimism is priced in - we think other companies feature superior fundamentals at the moment. Let us point you toward a safe-and-steady industrials business benefiting from an upgrade cycle.
Stocks We Would Buy Instead of Lindblad Expeditions
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