St. Joe (JOE) Reaches Break-Even In Q1 Earnings, Sales Up

The St. Joe Company (NYSE:JOE) reported first-quarter 2016 net income per share of 12 cents. However, results included $12.5 million of pre-tax income due to the settlement of claims associated with the Deepwater Horizon oil spill. Excluding that impact, adjusted net income per share came in at a break-even, which got the better of the Zacks Consensus Estimate of a loss of 4 cents per share. The company had incurred a net loss of 2 cents per share in the year-ago period.

Total revenue for the quarter was $20.3 million, denoting a rise of 18.7% year over year. Revenues also surpassed the Zacks Consensus Estimate of $19 million. The uptick was driven by growth in real estate sales, resorts and leisure revenues, leasing revenues and timber sales.

Quarter in Detail

In first-quarter 2016, real estate sales climbed 31.5% year over year to $7.1 million. Results included the sale of around 111 acres of non-strategic residential land in St. Johns County, FL for $3.4 million.

Moreover, St. Joe reported an 11.5% increase in resorts and leisure revenues to $8.7 million. Increased average room rates at both the WaterColor Inn and in the vacation rental program plus the timing of Spring Break and the Easter holiday helped the segment’s results to improve.

Leasing revenues grew 14.3% to $2.4 million. Rise in rent revenue related to the company's Pier Park North joint venture contributed to this increase.

Moreover, with a 10% year-over-year increase in total tons sold, timber sales climbed 16.7% from the year-ago quarter to $2.1 million.

Finally, St. Joe exited the first quarter with cash, cash equivalents and investments of $394.9 million, down from $404.0 million as of Dec 31, 2015. The decrease was due to the use of $14.8 million of cash for stock repurchases, partly offset by net receipts from its operations and other activities.

Our Viewpoint

In the long run, we believe St. Joe’s focus on enhancing its resort-based operations and leasing business would boost its profitability. Sale of non-strategic assets also provides it with substantial liquidity for developmental needs. But volatility in sales revenues at a few segments, and regional business concentration increases its risk.

St. Joe currently has a Zacks Rank #3 (Hold). Investors interested in the real estate industry may consider stocks like FirstService Corporation (NASDAQ:FSV) , LGI Homes, Inc. (NASDAQ:LGIH) and Reis, Inc. (NASDAQ:REIS) . While FirstService has a Zacks Rank #1 (Strong Buy), LGI Homes and Reis carry a Zacks Rank #2 (Buy).


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