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St. Joe (JOE) Rides on Lower Expenses: Should You Hold?

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On Jan 2, 2017, we issued an updated research report on The St. Joe Company (JOE - Free Report) , the WaterSound, FL-based real estate development and operating company.

The assets and operations of this company are concentrated mainly between Tallahassee and Destin. The company utilizes these assets for residential or commercial real estate developments, resorts, leisure and leasing operations as well as forestry operations on a limited basis.

In November, St. Joe reported third-quarter 2016 net income per share of 4 cents, which surpassed the Zacks Consensus Estimate of 2 cents and came ahead of the year-ago quarter tally of 3 cents. Lower expenses contributed to this beat. In fact, during the quarter, the company’s operating and corporate expenses declined by $4.7 million or 47% from the year- ago quarter and reflected a reduction in employee-related costs and professional fees. Total expenses for the quarter fell 15.2% from a year ago to $25.6 million.

However, volatility in sales in a number of segments at the company is a major concern. In fact, St. Joe’s forestry operations have historically been a significant contributor to its income. This segment generated a consistent revenue flow. However, following the AgReserves Sale, income from forestry operations has reduced, leading to variability in its period-to-period operational results and cash flows.

Over the past three months, shares of St. Joe recorded an increase of 4.6% compared with a gain of 4.8% posted by the Zacks categorized Real Estate - Development industry. The company’s 2016 estimates remained unchanged at 15 cents per share, over the past 30 days.


St. Joe currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space include Forestar Group Inc. (FOR - Free Report) , PennyMac Mortgage Investment Trust (PMT - Free Report) and RE/MAX Holdings, Inc. (RMAX - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Forestar Group’s current-year estimates have moved up significantly to $1.62 per share, over the past 60 days.

PennyMac Mortgage Investment Trust’s current-year estimates have moved up 18.2% over the past 60 days to $1.04 per share.

RE/MAX Holdings’s current-year estimates have moved up 1.8% over the past 60 days to $1.69 per share.

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