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

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Summary:
We are upgrading our recommendation on St. Joe to Outperform from Neutral. The company reported better-than-expected results in fourth-quarter 2013 thanks to a notable rise in revenues. Recently, the company reaped $562 million (including $200 million as a timber note) by selling around 380,000 acres of its non-strategic timberland and rural land in Northwest Florida to AgReserves Inc.'s subsidiaries. The move is a strategic fit for St. Joe and provides the company substantial liquidity, which it can deploy for development needs. St. Joe is currently focused on enhancing resort operations, development of the port at Port St. Joe as well as the active adult residential market, which would help it ride on the growth trajectory going forward.

Overview:

Incorporated in 1936 and currently based in WaterSound, FL, The St. Joe Company is engaged in real estate development and sales and has notable interests in the timber industry. The company owned approximately 567,000 acres of land (as of Dec 31, 2013) timber and resort, leisure and leasing assets concentrated mainly between Tallahassee and Destin, FL.

St. Joe reports its business activities under 5 operating segments 1) residential real estate, 2) commercial real estate, 3) rural land, 4) resorts, leisure and leasing operations and 5) forestry. The Residential Real Estate segment plans and develops mixed-use resort, primary and seasonal residential communities of various sizes, mainly on its existing land. The Commercial Real Estate segment develops and sells real estate for commercial purposes and provides development opportunities for national and regional retailers as well as for multi-family rental projects. The Rural land segment markets and sells tracts of land of varying sizes for rural recreational, conservation and timberland uses.

The Resorts, leisure and leasing operations segment generates revenues from its recurring revenue streams. These mainly include the WaterColor Inn and vacation rentals, golf courses, marinas and leasing operations. At times, the company also generates revenues from the sale of operating assets. The Forestry segment manages and harvests extensive timber holdings. The segment generates revenues from the sale of wood fiber, saw timber, standing timber as well as forest products and conservation land management services.

By segment, St. Joe's 2013 operating revenues are given below.


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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.



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