Stratus Properties, Inc. :STRS-US: Earnings Analysis: Q3, 2017 By the Numbers : December 12, 2017

Stratus Properties, Inc. reports financial results for the quarter ended September 30, 2017.

We analyze the earnings along side the following peers of Stratus Properties, Inc. – A V Homes Inc and Tejon Ranch Co. (AVHI-US and TRC-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 17.22 million, Net Earnings of USD 14.31 million.
  • Gross margins narrowed from 13.80% to 9.02% compared to the same period last year, operating (EBITDA) margins now -1.23% from 0.17%.
  • Year-on-year change in operating cash flow of -95.04% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth due to contribution of one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 17.22 21.43 20.66 20.99 21.18
Revenue Growth (%YOY) -18.69 11.9 8.61 0.01 7.64
Earnings (mil) 14.31 -0.89 -2.67 -0.17 -1.66
Earnings Growth (%YOY) 962.45 64.04 -58.65 -156.86 -116.19
Net Margin (%) 83.08 -4.17 -12.92 -0.83 -7.83
EPS 1.75 -0.11 -0.33 -0.02 -0.2
Return on Equity (%) 11.28 -0.74 -2.12 -0.13 -1.26
Return on Assets (%) 14.2 -0.9 -2.5 -0.15 -1.46

Access our Ratings and Scores for Stratus Properties, Inc.

Market Share Versus Profits

Revenues History
Earnings History

STRS-US’s change in revenue this period compared to the same period last year of -18.69% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that STRS-US is holding onto its market share. Also, for comparison purposes, revenues changed by -19.63% and earnings by 1,702.24% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings rose year-on-year. But this growth has not come as a result of improvement in gross margins or any cost control activities in its operations. Gross margins went from 9.02% to 13.80% for the same period last year, while operating margins (EBITDA margins) went from -1.23% to 0.17% over the same time frame.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

STRS-US’s change in operating cash flow of -95.04% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Margins

The company’s operating (EBIT) margins contracted from -10.17% to -13.02%. In spite of this, the company’s earnings rose. This was influenced primarily by one-time items, which improved pretax margins from -9.33% to 128.43%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Stratus Properties, Inc.

Company Profile

Stratus Properties, Inc. engages in the acquisition, development, and management of real estate assets. It operates through the following segments: Hotel; Entertainment; Real Estate Operations; Commercial Leasing; and Eliminations and Other. The Hotel segment manages W Austin Hotel and Residences. The Entertainment segment includes production studio and venue for live music, concert, and private events. The Real Estate Operations segment pertains to the firm’s residential properties. The Commercial Leasing segment offers office buildings and retail spaces. The Eliminations and Other segment consists of general and administrative operations. The company was founded on March 11, 1992 and is headquartered in Austin, TX.

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