St. Joe Incurs Loss as Expected in Q4, Revenues Surpass

The St. Joe Company JOE reported fourth-quarter 2015 loss of $2.5 million or 3 cents per share, in line with the Zacks Consensus Estimate. The company had recorded a net loss of $11.1 million, or 12 cents per share in the year-ago quarter.

Total revenue in the fourth quarter climbed 34.4% year over year to $21.1 million from $15.7 million in the year-ago quarter. Revenues also surpassed the Zacks Consensus Estimate of $16 million. The uptick was driven by growth in real estate sales, resorts and leisure revenues, and leasing revenues, partly offset by a decline in timber sales.

For full-year 2015, the company incurred a loss of 2 cents per share, while in the year-ago quarter, it had earned $4.40 per share. Importantly, the year-ago quarter results included the company's AgReserves and RiverTown transactions as well as the termination of its pension plan.

Total revenue in 2015 came in at $103.9 million compared with $701.9 million in 2014.  Total revenue was, however, $87.4 million in 2014, excluding the AgReserves and RiverTown transactions.

Quarter in Detail

In fourth-quarter 2015, real estate sales climbed to $9.4 million from $4.4 million in the prior-year quarter. Results reflect increased volume and price of lots in its primary and resort home communities plus sale of a non-strategic commercial 3.1 acre parcel.

Moreover, St. Joe reported a 10% increase in resorts and leisure revenues to $8.8 million. Results were driven by an increase in visitors mainly for the fall school break amid favorable weather conditions and a rise in wedding and corporate functions business. Leasing revenues grew 4.8% to $2.2 million.

However, with lower tons sold, timber sales totaled $0.7 million in the reported quarter, down 41.7% from $1.2 million in the year-ago period.

Finally, St. Joe exited the fourth quarter with cash, cash equivalents and investments of $404.0 million compared with $671.4 million as of Dec 31, 2014. The decrease was due to $305.0 million of cash used 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 development 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 Alexander & Baldwin, Inc. ALEX, Brookfield Property Partners L.P. BPY) and Kennedy-Wilson Holdings, Inc. KW. Each of these stocks carries a Zacks Rank #2 (Buy).

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