Shares of St. Joe Company (JOE - Free Report) , a real estate development and operating company, have been performing well, of late. In the past three months, the stock has rallied 8.8%, while the industry incurred a loss of 1.4%.
In fact, the rally might continue in the near term, as there are a number of favorable factors.
In second-quarter 2017, the company posted encouraging results in its real estate, leasing and timber segments. St. Joe has been making concerted efforts to expand its profit generating segments and actively shedding non-strategic assets. It is redeploying the proceeds from non-core asset sale into leasing, and resorts and leisure segments to achieve the desired balance in its segments. Moreover, the company’s strategy to maintain a low fixed expense structure should keep supporting its bottom-line performance.
If you haven’t taken advantage of the share price appreciation yet, the time is right for you to bet on the stock, as it is poised to ride on the growth trajectory.
Key Driving Factors
Upward Estimate Revisions: We note that earnings estimates for St. Joe have displayed a healthy uptrend. The company’s third-quarter and full-year 2017 earnings estimates moved up over the past seven days. Particularly, its third-quarter earnings estimate inched up by 33.3% to 4 cents, while the full-year estimate increased significantly over the past seven days.
Liquidity Strength: At the end of second-quarter 2017, St. Joe had cash and cash equivalents of $247.2 million, up from $241 million as of Dec 31, 2016. In addition, the company is exploring opportunities to sell assets that are not a strategic fit to its core real estate development activities, such as residential lots, timber land, rural land and/or related timber rights. These assets sale efforts provide the company substantial liquidity, which can be used to pursue extensive development plans.
Prudent Investments and Acquisitions: During the first half of 2017, the company expanded the size and scope of its leasing portfolio with the acquisition of the two Beckrich office buildings, which added more than 67,000 square feet of leasable space to the company’s portfolio. Also, the joint venture with HomeCorp for 240 apartment units is in sync with this strategy. It is also focused on strategic investments in its club and resort operations. The company’s efforts to fortify these segments will likely bolster its revenues. In fact, given the volatility in earnings from real estate and timber lines for the past quarters, performance of the company’s leasing segments offered some cushion.
Well-Positioned Portfolio: St. Joe continues to explore new commercial and industrial uses for its land portfolio. Notably, a significant amount of the company’s land is strategically positioned near the Northwest Florida Beaches International Airport and the coast of the Gulf of Mexico. The Northwest Florida Beaches International Airport, anticipated to drive growth in the region, increases the future value of the company’s holdings and provides an upside potential for St. Joe. Over the years, the company developed successful residential and commercial projects, and related infrastructure, which in turn, attracted regional and national businesses which contributed to regional growth and prosperity.
The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Other top-ranked stocks in the real estate space include Sun Hung Kai Properties Ltd. (SUHJY - Free Report) , FirstService Corp. (FSV - Free Report) and Unibail-Rodamco . While Sun Hung Kai Properties carries Zacks Rank #2 (Buy), FirstService Corporation and Unibail-Rodamco sport a Zacks Rank #1.
For Sun Hung Kai Properties, the Zacks Consensus Estimate for full-year 2017 earnings per share is expected to be up nearly 6.5% year over year to $1.15.
For FirstService Corporation, the Zacks Consensus Estimate for full-year earnings estimate is expected to be up nearly 53.3% year over year to $1.41.
For Unibail-Rodamco, the Zacks Consensus Estimate for full-year 2017 earnings estimate increased 7.7% to $1.39 over the past 60 days.
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