Stratus Properties 2025 Q1 Earnings Misses Targets with Net Income Down 201.6%

Stratus Properties reported its fiscal 2025 Q1 earnings on May 15th, 2025. The company's results fell short of expectations, with revenue and net income experiencing significant declines compared to the previous year. Despite the disappointing performance, Stratus Properties remains optimistic about its future prospects, citing ongoing development projects and strategic refinancing efforts. The company has adjusted its guidance, expecting key project completions in the second quarter, which may lead to improved results moving forward.

Revenue
Stratus Properties reported a sharp decline in total revenue, decreasing by 81% to $5.04 million in 2025 Q1 from $26.51 million in 2024 Q1. This downturn was largely due to the absence of property sales during the quarter, contrasting with significant sales in the prior year. The real estate operations segment barely contributed, with revenue totaling $25,000, while leasing operations provided a stronger performance, contributing $5.02 million. General and administrative expenses accounted for $0.

Earnings/Net Income
In 2025 Q1, Stratus Properties shifted to a loss of $0.36 per share, contrasting with a profit of $0.57 per share in 2024 Q1, marking a 163.2% negative change. The company reported a net loss of $3.76 million, reflecting a 201.6% decline from the $3.70 million net income achieved in 2024 Q1. This performance indicates significant challenges for the company during the period.

Price Action
The stock price of Stratus Properties edged up 2.82% during the latest trading day, edged down 0.69% during the most recent full trading week, and climbed 5.41% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Stratus Properties shares following revenue declines upon financial report release and holding for 30 days has yielded mixed results over the past five years. Although there were some positive returns, they were not consistently strong, particularly due to the volatile real estate market. From May 15, 2020, to May 15, 2025, this approach achieved a total return of approximately 12.5%, compared to a 5-year annualized return of about 2.5%. Monthly returns varied greatly, with notable losses in November 2020 (-10.4%) and August 2021 (-9.3%), alongside gains such as May 2021 (11.7%) and January 2024 (9.1%). The strategy's beta of 1.2 suggests moderate volatility, implying potential for higher returns but also greater risk of losses. With a Sharpe ratio of 0.5, the risk-adjusted returns were modest, and the negative MACD indicator often suggested bearish momentum, contributing to underperformance. This strategy, while capable of generating returns, was not consistently effective, and investors should exercise caution, considering the inherent volatility and risk.

CEO Commentary
William H. Armstrong III, Chairman and CEO of Stratus Properties, highlighted progress in the first quarter of 2025, noting the anticipated completion of The Saint George multi-family project and the final two Amarra Villas homes in the second quarter. Armstrong emphasized the focus on the Holden Hills Phase 1 project, a significant residential development, along with plans for the adjacent Holden Hills Phase 2 mixed-use project. He also mentioned successful refinancing efforts and the sale of the West Killeen Market retail project, expressing pride in the team's dedication to building shareholder value through various market conditions.

Guidance
Stratus Properties is optimistic about completing several key projects in the second quarter of 2025, including The Saint George and the final two Amarra Villas homes. The company expects the sale of West Killeen Market for approximately $13.3 million to close in the upcoming quarter, generating around $7.7 million in pre-tax net cash proceeds. Armstrong conveyed a cautious yet optimistic outlook on future growth, with plans for attractive multi-family development projects contingent on market conditions and financing.

Additional News
Stratus Properties has actively engaged in strategic refinancings and share repurchases in recent months. The company completed a refinancing of project loans at Lantana Place and Jones Crossing, securing lower interest rates and generating approximately $4.2 million in cash proceeds. Additionally, Stratus initiated a share repurchase program, acquiring 83,380 shares at an average price of $23.98 per share, with $3.0 million remaining available for repurchases. These actions align with Stratus's strategy to enhance shareholder value amidst fluctuating market conditions. CEO William H. Armstrong III stressed the importance of these efforts in maintaining strong financial positioning and capitalizing on favorable opportunities in the real estate sector.