The St. Joe Company (JOE): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


We are downgrading our recommendation on St. Joe to Neutral from Outperform on concerns of top-line growth. The company's third-quarter 2014 results came below the Zacks Consensus Estimate as well as the comparable period prior-year figure, due to a decline in both real estate and timber sales. In fact, the company's total revenue came 34.8% down from the year-ago quarter. This decline in sales revenue from a number of its segments adds to our concerns. However, in the long run, we believe that the company's focus on enhancing its resort-based operations would help it to recover the profitability. Moreover, the company continues to explore new commercial and industrial uses for its land portfolio to increase the future value of its holdings, which is encouraging.


Incorporated in 1936 and currently based in WaterSound, FL, The St. Joe Company is engaged in real estate development and sales, with notable interests in the timber industry. The company owned approximately 567,000 acres of land (as of Dec 31, 2013) in timber and resort, leisure and leasing assets concentrated mainly between Tallahassee and Destin, FL. As of Sep 30, 2014, St. Joe had four operating segments: residential real estate, commercial real estate, resorts, leisure and leasing operations, and forestry.

The residential real estate segment (generated 8.3% of operating revenues in the first nine months of 2014) produces revenues from the development and sale of homes and homesites while the commercial real estate segment (0.5%) vends undeveloped or developed land and commercial operating property. On the other hand, the resorts, leisure and leasing operations segment (6.6%) reaps revenue and rental fees related to its vacation rental program in the WaterColor Inn, WaterColor, WaterSound Beach and neighboring communities and other resort, golf club, marina and retail/commercial leasing operations. Finally, the forestry segment (84.6%) generates and sells woodfiber, sawtimber as well as other forest products and may sell the company's timber or rural land holdings.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: JOE

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