As the company reported its third-quarter earnings last week, EverBank Financial Corp. also announced a deal to sell off a piece of its mortgage-servicing business – and also shed some employees and a chunk of its space in the EverBank Center Downtown.
Jacksonville-based EverBank said it is selling off the rights to service $13.4 billion in mortgage loans with a "higher delinquency profile" to Green Tree Servicing LLC. The company also entered a sub-servicing agreement with Green Tree for $6.9 billion in additional loans.
As part of the agreement, Green Tree will make offers to hire at least 500 current EverBank employees and take over 86,000 square feet of office space in the building at 301 W. Bay St., EverBank President Blake Wilson said in the company's quarterly conference call.
EverBank spokesman Michael Cosgrove said the company currently has 1,726 employees in the EverBank Center, but not all of the 500 positions going to Green Tree are located there. Some are in other locations in Jacksonville and some are in St. Louis.
EverBank has a total current employment of 4,177.
Cosgrove said Green Tree will end up with three floors at the EverBank Center, while the bank will remain in eight floors in the building.
Green Tree, headquartered in St. Paul, Minn., is owned by Tampa-based Walter Investment Management Corp. Green Tree has 29 offices across the country.
Wilson said Green Tree has more expertise in handling higher delinquency loans. EverBank will retain a servicing portfolio of about $40 billion in mortgage loans with "attractive performance metrics," he said.
"The remaining portfolio has a low coupon, a significantly improved cost structure, a client base with characteristics consistent with our core banking and lending clients and an attractive earnings profile," Wilson said.
EverBank also reported adjusted third-quarter earnings of 26 cents a share, down from 30 cents in the third quarter of 2012 and 3 cents lower than the average forecast of analysts surveyed by Thomson Financial.
The lower earnings didn't bother Macquarie Capital analyst Thomson Alonso, who said in a research note that he is maintaining his "outperform" rating on EverBank's stock.
"The shares look undervalued at about 11.2 times 2014 estimated EPS given strong growth outlook and potential for multiple expansion," Alonso said.
Body Central cuts staff
As Body Central Corp. reported its second straight quarterly loss last week, the Jacksonville-based fashion retailer also announced it is cutting staff.
In its conference call with analysts, Chief Operating Officer and Chief Financial Officer Tom Stoltz said Body Central cut 18 positions, representing 11 percent of the corporate staff.
The company also is reducing payroll in its stores by altering the schedules of employees, he said.
Body Central reported a net loss in the quarter of $9 million, or 55 cents a share. Total sales fell 10.4 percent to $60.8 million and comparable-store sales – sales at stores open for more than one year – dropped 18.3 percent.
"We are only several months into the company's repositioning initiatives. We firmly believe the direction we are taking is the right one," CEO Brian Woolf said in the conference call.
"While we continue to implement our plans, we were disappointed in our third-quarter results as the continuing challenging retail environment impeded our progress," he said.
"While our comparable store sales and gross margin performance clearly did not meet our expectations, we do remain confident that we are taking the right steps to get our business back on track."
Stoltz said the company continues to look for ways to cut costs, but he doesn't expect more job losses.
"We think we've made the reductions in the corporate staff that are appropriate," he said.
While analysts were anticipating a loss in the quarter, the results were worse than they expected.
Robert W. Baird analyst Mark Altschwager said he is now anticipating a bigger loss in the fourth quarter and in 2014 than he had previously forecast.
"While expectations were low, disappointing comp and margin performance resulted in a meaningful reduction to our estimates. Meanwhile, liquidity is a growing concern with a protracted negative free cash flow outlook," Altschwager said in a research note.
"Much change is underway, but we advise investors to remain on the sidelines until signs of a turnaround in the business emerge," he said.
Dougherty & Co. analyst Jeremy Hamblin also is staying on the sidelines.
"While we continue to believe there is plenty of opportunity for the company to recover long term, we believe the risk factors in Body Central shares have increased significantly and the stock is becoming more speculative," Hamblin said in his report.
"We are maintaining our 'neutral' rating on Body Central shares until we see clear evidence of improved sales and a stabilization of the company's cash position," he said.
Body Central's stock opened at a new low of $4.41 Friday morning after the late Thursday report. The stock finished Friday at $3.94, down $1.69 on the day.
FIS rises on strong earnings
Fidelity National Information Services Inc.'s stock rose by as much as $2.69 to $49.63 Tuesday, its highest level in six years, after reporting better-than-expected earnings.
The Jacksonville-based company, which provides technology services for banks, reported adjusted earnings of 74 cents a share in the third quarter, 11 cents higher than last year and 3 cents higher than the average forecast of analysts surveyed by Thomson.
"FIS' third quarter performance was strong by all measures, as we delivered on all key metrics of growth, profitability and cash generation," CEO Frank Martire said in the company's conference call with analysts.
SunTrust Robinson Humphrey analyst Andrew Jeffrey raised his price target on the stock from $52 to $57 after the report, saying in a research note that the "market seems to underestimate sustainable organic revenue and EBITDA growth."
However, while Jeffrey maintains a "buy" rating, Sterne, Agee & Leach analyst Greg Smith maintains a "neutral" rating.
Smith said in his research report that the company's earnings have benefited this year from termination fees from some clients, and that will make it difficult for FIS to achieve higher earnings next year.
"While we hold a positive view of FIS' competitive position and the market environment and are enthused by a number of large new deals this year, we still see some challenges in filling the tough termination fee comp in 2014," Smith said. "We remain on the sidelines with a neutral rating on FIS pending better visibility into 2014."
Regency increases earnings
Regency Centers Corp. last week reported third-quarter funds from operations of 65 cents a share, up from 58 cents a year ago and a penny higher than the average analysts' forecast, according to Thomson.
Funds from operations are basically earnings excluding depreciation and amortization expenses and are considered the key metric for evaluating real estate companies.
In the company's conference call, Chairman and CEO Martin "Hap" Stein touted the strong fundamentals for Jacksonville-based Regency, which develops and operates shopping centers mainly anchored by grocery stores.
Regency's portfolio of 333 shopping centers across the country was 94.6 percent leased as of Sept. 30 and its same-property net operating income rose by 4.5 percent through the first nine months of this year.
"This positive momentum from robust demand for space in our high-quality assets, the limited amount of new supply and the beneficial impact of redevelopments should continue to drive occupancy and accelerate rent growth," Stein said.
Atlantic Coast Financial reports loss
Atlantic Coast Financial Corp. last week reported a net loss of $929,000, or 38 cents a share, in the third quarter.
The Jacksonville-based banking company did show an improvement in its level of bad loans. Total non-performing assets fell 27 percent to $25.1 million, or 3.51 percent of total assets as of Sept. 30. That's down from 4.35 percent a year earlier.
Rayonier, Landstar fall further on downgrades
Rayonier Inc. and Landstar System Inc. both dropped on Oct. 24 after disappointing third-quarter earnings reports, but both companies fell again the next day after several analysts downgraded the companies' stocks.
Rayonier fell $3.52 to $54.96 on Oct. 24 but plunged by as much as $8.71 to a 52-week low of $46.25 the next day as three analysts downgraded their ratings on the Jacksonville-based forest products company.
Rayonier recently completed a cellulose specialties expansion project at its mill in Jesup, Ga., which the company expects to bring big profits in the future. However, the company told analysts in its third-quarter conference call that short-term results in that business could be sluggish.
Deutsche Bank analyst Mark Wilde had the harshest downgrade, lowering the stock from "hold" to "sell."
"Rayonier said recent contract negotiations suggest a drop in 2014 cellulose specialties (CS) prices and slower transition to CS. Beyond lower cash flows, a sharp price drop could dampen bullish 'specialty chemicals' valuations that have been floated for the segment," Wilde said in his report.
"Pick-up in timber and real estate markets may mitigate some downside pressure on the stock, but they won't eliminate it," he said.
Raymond James analysts downgraded the stock from "strong buy" to "market perform."
"Longer-term, we continue to believe its cellulose specialties expansion project sets the foundation for significant cash flow (and dividend) growth. We remain attracted to the multi-year growth prospects of this business and the barriers to entry competitors face to gaining meaningful market share over a sustained period," they said
"However, commentary on yesterday's conference call made it clear that the timeline for Rayonier to realize the full benefits of this expansion project has been extended (potentially into 2017/2018 versus 2016/2017). As such, we believe it is prudent to step to the sidelines as we expect this will place a near-term overhang on Rayonier shares," they said.
D.A. Davidson analyst Steven Chercover is the one analyst retaining a "buy" rating on Rayonier. He said after the earnings report that he expected the stock to fall and that it could create a buying opportunity
"At press time, Rayonier has the highest dividend yield of the Timber REIT peer group, and nothing we heard today diminishes the potential of a 2014 dividend hike (after an 11 percent hike in 2013)," Chercover said in his report.
Based on its current annual dividend rate of $1.96 a share, the dividend yield on Rayonier's stock is more than 4 percent.
Two analysts downgrade Landstar
Landstar fell a more modest $1.10 to $53.87 on Oct. 25 after two analysts downgraded the stock. The stock had dropped $2.90 to $54.97 the previous day.
Avondale Partners analyst Ryan Bouchard downgraded the Jacksonville-based trucking company from "market outperform" to "market perform."
"In the absence of any near-term catalyst in the company's core operations, we feel it prudent to step aside at this point and wait for either 1) a more attractive entry point in the stock, or 2) signs of improvement in the flatbed market," Bouchard said in his report.
Credit Suisse analyst Allison Landry downgraded Landstar from "outperform" to "neutral."
"We have been willing to give Landstar the benefit of the doubt over the past few quarters in anticipation of a pick-up in its manufacturing/heavy-haul business during the second half of 2013, but it is now clear that a re-acceleration in revenues and earnings is unlikely to materialize in the near term," Landry said in her report.
"We fully acknowledge that we were one of the few remaining buys on the Street, and even in the face of catching some slack from the buy side for being 'late to the game,' we simply can no longer justify our outperform rating on the stock," she said.
According to Thomson, seven of 23 analysts following Landstar still rate it at the equivalent of "buy."
Stein Mart downgraded on valuation
Stein Mart Inc. also received a downgrade, but only after the Jacksonville-based fashion retailer reached a 52-week high of $15.50 last Monday.
Sidoti & Co. analyst Michael Richardson downgraded Stein Mart from "buy" to "neutral" as the stock closed in on his price target of $16.
Richardson said in his report that "the growth we forecast is largely reflected in the share price," with the stock up 105 percent so far this year.
"Despite the company's positive long-term outlook, strong balance sheet and anticipated strong solid free cash flow, we see limited near-term appreciation potential for the shares," Richardson said.
"Based on the rally in the stock price year to date, we do not find the risk/reward compelling, with the stock trading at 17.8 times our 2015 EPS estimate of $0.87," he said.
LPS meeting set for Dec. 19
Lender Processing Services Inc. has scheduled its special meeting for shareholders to vote on a buyout offer from Fidelity National Financial Inc. for Dec. 19.
The meeting will be held at the Riverside Avenue office complex where LPS and Fidelity National Financial – as well as FIS – are headquartered.
Fidelity is offering a combination of cash and stock to LPS shareholders.
The terms of the deal keep changing but under the latest terms, current LPS shareholders will end up owning 10 percent of Fidelity's stock after the merger, according to the LPS proxy statement.
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