Investment Thesis
ST Joe demonstrates strong top-line growth (+27.4% YoY) and exceptional free cash flow generation (40.6% margin), but concerning capital returns (ROE 1.8%, ROA 0.9%) and flat net income growth signal poor asset efficiency and margin compression. Tight interest coverage (2.1x) in a cyclical real estate development sector limits financial flexibility for downturns.
Strengths
- Strong revenue growth of 27.4% YoY demonstrates market demand and business expansion
- Exceptional free cash flow margin of 40.6% with $40.2M FCF generation indicates strong liquidity
- Moderate leverage at 0.50x debt/equity ratio provides balance sheet stability
- Operating margin of 18.4% shows reasonable operational profitability
Risks
- Critically low ROE (1.8%) and ROA (0.9%) indicate severe capital inefficiency despite profitability
- Net income flat YoY amid 27.4% revenue growth signals margin compression or cost inflation
- Interest coverage of 2.1x is dangerously tight; minimal cushion for revenue decline or rate increases
- Land development is cyclical; unclear if revenue growth is sustainable or driven by favorable cycle
- Very low capex (2% of revenue) suggests either mature assets or underinvestment in growth
Key Metrics to Watch
- Return on equity trend—must improve toward 8%+ to justify capital base
- Interest coverage ratio—needs to exceed 3.0x for financial safety
- Net margin trajectory—must expand beyond flat growth to validate scale benefits
- Asset base utilization—clarify composition and productivity of $1.5B balance sheet
Financial Metrics
Revenue
99.0M
Net Income
13.9M
EPS (Diluted)
$0.24
Free Cash Flow
40.2M
Total Assets
1.5B
Cash
136.3M
Profitability Ratios
Gross Margin
38.3%
Operating Margin
18.4%
Net Margin
14.1%
ROE
1.8%
ROA
0.9%
FCF Margin
40.6%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.50x
Debt/Assets
49.0%
Interest Coverage
2.13x
Long-term Debt
380.4M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T11:21:09.403252 |
Data as of: 2026-03-31 |
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