St. Joe May See Market Worsen

The St. Joe Company (JOE - Analyst Report), a publicly held, operationally diverse real estate company, is based in Jacksonville, Florida. It is one of Florida's largest real estate developers.

Operations are getting worse at JOE. The company reported a net loss of $27.9 million or ($0.31) per share in 4Q08. 4Q earnings included impairments and write downs of $0.34 per share. While operations continue to deteriorate, the company is currently focused on maintaining liquidity and cutting expenses.

In addition, JOE has repaid most of its long-term debt and the company has sufficient cash reserves to get through the residential real estate slump. Although, there are no signs that the housing situation will get better in the next six months, and the worst could be yet to come.

Near term, we would stay away from companies with exposure to the residential building business. While we think the company is a good long-term investment, we are maintaining our near-term Sell recommendation.