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St. Joe (JOE) Q2 Earnings and Revenues Grow Year over Year

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The St. Joe Company reported second-quarter 2017 net income per share of 15 cents compared with the prior-year quarter figure of 2 cents. Revenues grew roughly 3% year over year.

Total revenue for the quarter came in at $30.4 million compared with $29.5 million recorded in the year-ago period. This increase was driven by higher leasing revenue, timber revenue and real estate revenue. However, the quarter witnessed a slight decline in the resorts and leisure business revenues.

Nevertheless, the company’s total expenses for the quarter declined 5.8% from the prior-year quarter to $25.8 million.

St. Joe Company (The) Price, Consensus and EPS Surprise

Behind the Headline Numbers

In the reported quarter, real estate revenue came in at $7.2 million, up from $6.7 million recorded in the comparable period last year. Timber revenue remained flat sequentially at $1.2 million and increased from $0.7 million in the prior-year quarter.  
Leasing revenues increased year over year to $2.7 million from $2.3 million. St. Joe’s leasing segment includes around 671,000 of net rentable square feet, which was 84% leased as of Jun 30, 2017. However, resorts and leisure revenues were $19.3 million in the reported quarter, down from $19.8 million posted in the year-ago period.

In addition, investment income from available for sale securities for the quarter came in at $12.1 million in the second quarter, up from $0.8 million recorded in the year-earlier period. This is attributed to higher interest and dividend income due to changes in the company's investment portfolio and sale of investments at a realized gain of $7.7 million.

Liquidity Increases

Finally, St. Joe exited second-quarter 2017 with cash, cash equivalents and investments of $414.9 million, down from $392.6 million as of Mar 31, 2016.

In Conclusion

St. Joe has been making strategic efforts to enhance the size of its leasing portfolio while opting to sell selective commercial property. Furthermore, the company is now emphasizing on recurring revenue generating projects like real estate. As part of such efforts, following the second-quarter 2017 results, the company accomplished the purchase of two office buildings in Panama City Beach, FL, aggregating more than 67,000 rentable square feet. We believe that the efforts to fortify these segments would help the company bolster its revenues.

Although real estate and timber segments performed well during the reported quarter, the volatile nature of their revenues cannot be ignored. In the residential real estate business, the customer mix has shifted from retail sales with a more steady revenue flow to homebuilder’s sales which have a propensity for irregularity.

Additionally, concentration of business in Florida, particularly in the Northwest, as well as competition from other developers remains a concern for the company.

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.

The stock has lost 5.8% year to date, underperforming 10.6% growth recorded by the industry it belongs to.

Q2 Earnings Schedule of Other Real Estate Companies

We now look forward to the earnings releases of other companies in the real estate sector like The Howard Hughes Corporation (HHC - Free Report) , LGI Homes, Inc. (LGIH - Free Report) and Five Point Holdings, LLC (FPH - Free Report) . While Howard Hughes Corporation is scheduled to announce results on Aug 7, LGI Homes and Five Point Holdings are slated to report Q2 numbers on Aug 8 and Aug 10, respectively.

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