Stratus Properties, Inc. :STRS-US: Earnings Analysis: Q4, 2016 By the Numbers : March 21, 2017

Stratus Properties, Inc. reports financial results for the quarter ended December 31, 2016.

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 20.99 million, Net Earnings of USD -0.17 million.
  • Gross margins narrowed from 20.75% to 19.48% compared to the same period last year, operating (EBITDA) margins now 6.46% from 15.76%.
  • Year-on-year change in operating cash flow of 10.36% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

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):

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 20.99 21.18 19.15 19.03 20.98
Revenue Growth (%YOY) 0.01 7.64 -4.18 -5.93 -21.3
Earnings (mil) -0.17 -1.66 -2.48 -1.68 0.31
Earnings Growth (%YOY) -156.86 -116.19 -121.89 -253.57 -97.34
Net Margin (%) -0.83 -7.83 -12.97 -8.85 1.46
EPS -0.02 -0.2 -0.31 -0.21 0.04
Return on Equity (%) -0.53 -5.03 -7.42 -4.96 0.9
Return on Assets (%) -0.15 -1.46 -2.22 -1.54 0.28

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 0.01% 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 -0.92% and earnings by 89.51% 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 year-on-year decline in earnings was influenced by a weakening in gross margins from 20.75% to 19.48%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 15.76% to 6.46% in this time frame. For comparison, gross margins were 13.80% and EBITDA margins were 0.17% in the previous period.

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 10.36% 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 decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 6.08% to -4.16% and (2) one-time items that contributed to a decrease in pretax margins from 3.06% to -1.74%

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. is a real estate company, which engages in the development, management, operation and/or sale of commercial, hotel, entertainment, and residential real estate properties. It operates through the following segments: Hotel, Entertainment, Real Estate Operations, and Commercial Leasing. The Hotel segment includes revenue from W Austin Hotel room reservations and food and beverage sales. The Entertainment segment involves in ticket sales, revenue from private events, sponsorships, personal seat license sales and suite sales, and sales of concessions and merchandise. The Real Estate Operations segment comprises of stratus real estate which consists of its properties. The Commercial Leasing segment includes the office and retail space. The company was founded on March 11, 1992 and is headquartered in Austin, TX.

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