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St. Joe misses earnings - and guides forward estimates lower

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G

GaltsGulch

Beach Comber
Joe misses expectations (again), and lowers forward outlook (again). When Joe last lowered their Full Year earnings expectations significantly last quarter, they didn't guide low enough. Now guiding significantly lower for the year. I'm covering short position this morning in the low $40's ($42)... I think the risk/reward is mostly played out on the short side of the stock. If you take the middle of the range of earnings $0.85 and apply a market multiple (16x P/E) to that, you would arrive at a target price of around $14 for JOE. HOWEVER, their land holdings (which are very tough to value as they won't become earnings next year, but rather over the next 20 yrs.) have a net asset value of at least $25/share according to the most conservative analysis I have reviewed. So you add $25 to $14 and you come up with $39 as fair value... Not to say sentiment will not worsen and take JOE below my lonely estimate of fair value, its just that you can't be greedy.

--------------------------------------------------------------
07:24 JOE St. Joe Company reports Q2 in-line; lowers FY06 EPS guidance (44.90 ) *****

Reports Q2 (Jun) earnings of $0.25 per share, in line with the Reuters Estimates consensus of $0.25; revenues fell 25.0% year/year to $194.7 mln vs the $214.3 mln consensus. Co lowers guidance for FY06, sees EPS of $0.70-1.05 vs. $1.16 consensus.

07:08 JOE sees FY06 $0.70-1.05 vs $1.16 Reuters consensus

07:07 JOE prelim $0.25 vs $0.25 Reuters consensus; revs $194.7 mln vs $214.33 mln Reuters consensus

07:07 JOE St. Joe Company and Beazer Home announce new long term relationship (44.90 ) *****

JOE and and Beazer Homes USA (BZH) announce the two cos have entered into a long-term relationship under which JOE would entitle, develop and sell home sites in a number of its Florida towns to Beazer Homes, who would build and market the single and multi-family homes.
 
GaltsGulch said:
JOE and and Beazer Homes USA (BZH) announce the two cos have entered into a long-term relationship under which JOE would entitle, develop and sell home sites in a number of its Florida towns to Beazer Homes, who would build and market the single and multi-family homes.
Click to expand...

Sounds like a match made in heaven.

"Beazer said that its second-quarter profit fell to $102.6 million, or $2.37 a share, from $112.7 million, or $2.50 a share, a year earlier. Revenue dropped to $1.20 billion from $1.29 billion. The Atlanta-based builder posted a 16% drop in new orders to 4,378 homes from 5,202 a year earlier.

The company, noting that it doesn't expect housing conditions to improve in the remainder of the year, said it now expects 2006 earnings of $9.25 to $9.75 a share. Beazer's previous guidance called for earnings of $10 to $10.50 a share; analysts predict a profit of $9.60 a share.

Pulte (homebuilders) management said the biggest issue it's facing is that a large portion of buyers are waiting on the sidelines because they're seeing a risky housing market.

"How bad will it get and how long will it last?" management asked. "No one can answer these questions with any degree of certainty."

One major issue continues to be the huge amount of housing inventory for sale across the country -- particularly in California and Florida, Pulte said. For its part, Beazer posted its biggest order drop in the West and in Florida. " :idontno:
 
Shelly, me thinks that builders are a leading indicator of housing valuation trouble, not a co-incident or trailing indicator. Me further thinks that when they stop building, and start writing down certain assets (reporting losses), we won't yet be at a bottom for the pending real estate re-valuation, but that will mark the beginning of the swiftest most significant downward valuation move in the cycle. No one can say when this swift downward move will take place, but hopefully we'll know it when we see it. Chances are we (myself included) will not have the fortitude to see the opportunity, because when it presents itself it will not appear to offer any quick ROI. My best guess, is that we see this largest downward phase begin in 6 months, and last for the ensuing 12-18 months before we stabilize. Carrying costs are a thorn in the investulators side currently. We'll move to the bottoming phase when "carrying costs" are no longer thought of as "carrying costs" b/c they can no longer be "carried" by a significant enough chunk of 2nd home owners/speculators, that sales are mandated by economic survival or court appointed trustees. We're not at that point in the phase, just yet IMO.
 
GALTSGULCH
congratulations on your profitable trade. no one ever went broke taking a profit !!
 
buy on anticipation....sell on the news. shelley, in the 80's all the good news was in the price...in the 40's all the bad news is in the price. look at charts on EVERY housing stock....the downtrend is broken. you have a road map to tell you what the bottom is, because the lows have been seen. when the market starts to test the lows of the housing stocks YOU BUY because you know where the bottom has been established. every housing stock has been trading at book value or very close to book. no one can ever call the highs or lows but we have a very good idea of the range now. a patient investor will make a lot of money buying housing stocks on the next pullback, in my humble opinion.
 
goofer44 said:
buy on anticipation....sell on the news. shelley, in the 80's all the good news was in the price...in the 40's all the bad news is in the price. look at charts on EVERY housing stock....the downtrend is broken. you have a road map to tell you what the bottom is, because the lows have been seen. when the market starts to test the lows of the housing stocks YOU BUY because you know where the bottom has been established. every housing stock has been trading at book value or very close to book. no one can ever call the highs or lows but we have a very good idea of the range now. a patient investor will make a lot of money buying housing stocks on the next pullback, in my humble opinion.
Click to expand...

Fill me in on what bottom you are seeing... Looks to me like they are still falling into the abyss...

Referring to the attached graph and looking at the previous manic stock market (NASDAQ of late 90's early 00's) and comparing to the DJ_USHB (Dow Jones US Home Builder Index) we have a long ways to go.....

They seem to follow pretty well on the way up in both time and magnitude... think that will change on the way down???

http://tinyurl.com/rquf7
 
destinism
i feel comfortable nibbling on kbh @ 38 ryl @34 tol @22 dhi @20 hov @25 ctx @43 phm @26 joe @42 .........all at their recent lows. at these levels they offer good value. these stocks all had violent reactions to the upside on good volume. they got too cheap on a book value basis. these prices i stated indicate to me the the price points that i want to nibble at. i am a long term investor ( 2-4 years ) if these stocks return to the prices i indicated i will put on 25% positions.......if they don't return to those prices, i guess i won't own any housing stocks !! i am a very disciplined investor and perhaps a little pigheaded.....but i have done well over 30 years following this game plan. my other strategy is to buy great blue chip companies that pay good dividends and have a long term track record , when they have a temporary stumble. i have been pecking away at mmm ups dow. i am NOT a momentum player. i bought c bac pfe aig cvx bp xom mo when they were unloved. i also bought intc msft and ge and am still waiting !!! i think my wait in intc and msft will still be far off into the future but i really like ge. they raise the dividend every year and will be a big beneficiary of alternative fuel sources. sorry to run on but i really love the challenges of investing.
 
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