St. Joe (JOE) Q1 Earnings Beat Estimates, Revenues Down Y/Y

The St. Joe Company (NYSE:JOE) reported first-quarter 2017 net income per share of 6 cents, which compared favorably with the Zacks Consensus Estimate of a loss of 3 cents. However, the figure was lower than the year-ago quarter earnings of 12 cents.

Total revenue for the quarter came in at $13.2 million compared with $20.3 million recorded in the prior-year period. Decline in real estate revenue primarily dragged down the top-line figure. Moreover, the prior-year period result included a $3.4 million unimproved land sale with a gross profit of $3.3 million.

Nevertheless, the company’s total expenses for the quarter declined 14.6% from the prior-year quarter to $18.1 million.

Quarter in Detail

In the reported quarter, real estate revenue came in at $1.5 million, down from $7.1 million recorded in the comparable period last year. Resorts and leisure revenues were $8.1 million in the reported quarter, down from $8.7 million posted in the year-ago period. Also, timber revenue decreased to $1.2 million from $2.1 million in the prior-year quarter.

However, leasing revenues remained flat year over year at $2.4 million. St. Joe’s leasing segment includes around 604,000 of net rentable square feet, which was 86% leased as of Mar 31, 2017. This compared with about 589,000 of net rentable square feet that was 84% leased as of Mar 31, 2016.

In addition, investment income for the quarter came in at $10.4 million in the first quarter, up from $2.7 million recorded in the year-earlier period. This is attributed to higher interest income and dividend income due to changes in the company's investment portfolio, and a sale of investments at a realized gain of $3.1 million.

Finally, St. Joe exited first-quarter 2017 with cash, cash equivalents and investments of $392.6 million, down from $416.8 million as of Dec 31, 2016. The decline was due to the $34.2-million of cash utilized for stock repurchases, offset by net receipts from the company's operations and other activities.

In Conclusion

St. Joe is making strategic efforts to enhance the size of its leasing portfolio while opting to sell commercial property selectively. As part of such efforts, following the first-quarter 2017, the company accomplished purchase of two office buildings in Panama City Beach, FL, aggregating more than 67,000 rentable square feet. However, volatility in sales revenues at a few segments and regional business concentration increase its risks.

St. Joe currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the real estate industry may consider stocks like AV Homes, Inc. (NASDAQ:AVHI) , Henderson Land Development Company Limited (OTC:HLDCY) and Mitsubishi Estate Co., Ltd. (OTC:MITEY) . All these stocks carry a Zacks Rank #2 (Buy).

AV Homes’ estimates for 2017 earnings of $1.00 per share reflect expected growth of 4.2%. Henderson Land Development Company’s earnings estimates for 2017 climbed 4.3% over the past 60 days to 48 cents. Mitsubishi Estate Co. has long-term growth rate of 5.3%.

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