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4 Reasons to Buy Jones Lang LaSalle (JLL) Stock Right Now

·5 min read

Shares of Jones Lang LaSalle JLL, better known as JLL, put up a solid performance over the past three months, with the stock appreciating 35.9% compared with its industry’s 15.8% growth.

Moreover, a positive trend in estimate revisions reflects optimism in the company’s earnings growth prospects. Over the past month, the Zacks Consensus Estimate for JLL’s 2020 and 2021 earnings have moved 7.4% and 7.2% north, respectively, to $7.87 and $10.44.

The fundamentals appear solid for this Zacks Rank #1 (Strong Buy) stock. Moreover, there is enough scope for the stock’s price appreciation in the near term.

In fact, the commercial real estate market is on a rebounding phase, with a significant recovery in investor sentiment after being adversely impacted by the coronavirus pandemic last year. In fact, acceleration of certain trends, outsourcing real estate needs, vaccine roll out and waning macroeconomic uncertainty, substantial liquidity and ultra-low interest rates will likely help the industry.

Given JLL’s broad range of real estate products and services as well as an extensive knowledge of domestic and international real estate markets, the company is well poised to bank on favorable trends. Let’s now delve deeper into JLL’s strengths.

Reasons to Buy

Robust Scale: JLL is focused on balanced revenue growth across profitable markets. Also, its superior client services and strategic investment in technology and innovation are expected to help grow its market share and win relationships, thereby helping the company achieve notable growth as well as a decent cash level.

In fact, over the past several years, JLL has completed several strategic acquisitions as part of its global growth strategy, thereby expanding its capabilities in a number of service offerings and boosting presence in key regional markets. Though the pandemic had an adverse impact on transaction-based service lines, there has now been improvement in pipelines in both leasing and capital markets, which is encouraging.

Growing Outsourcing Business: The company’s Corporate Solutions business, which is its multi-service outsourcing business, includes integrated Facility Management and Corporate Solutions-related services from Leasing, Project & Development, as well as Advisory & Consulting, is well poised to capitalize on the favorable trends. In fact, amid rising trend of outsourcing of real estate needs by companies, new contract wins and expansion of services with existing clients are likely to aid JLL’s performance in the upcoming period. Also, amid the pandemic, Corporate Solutions continued to show its resilience as a scaled global platform, and the business continues to generate new client wins and expansions, which include advising on reentry strategies and protocols.

Cash Flow Growth: JLL enjoyed historical cash flow growth (three to five years) of 13.41%, which comfortably exceeded 8.29% growth registered by the industry. Moreover, its current cash flow growth of roughly 25.02% compares favorably with the 7.66% increase estimated for the industry.

Strong Balance Sheet and Superior Return on Equity (“ROE”): JLL’s robust balance sheet helps manage debt level efficiently. As of Sep 30, 2020, the company’s net debt amounted to $752 million, marking a decline of $320 million from June end and nearly $730 million from September 2019 end, reflecting the operating cash flow drivers. Moreover, JLL exited the quarter with $2.8 billion of liquidity, including roughly $440 million of cash and 85% of capacity available on its $2.75 billion revolver.

While for at least the foreseeable future, management does not expect to resume paying a dividend, it plans to return cash to shareholders via share repurchases. The company also enjoys investment grade ratings — Moody’s: Baa1 and S&P: BBB+ — which highlight the financial and balance sheet strength. In addition, JLL’s ROE is 10.7% compared with the industry average of 3.37%. This highlights that the company reinvests more efficiently compared to the industry. With a solid balance sheet and sufficient financial flexibility as well as manageable debt maturities, JLL remains well poised to sail through the challenging times and capitalize on solid opportunities.

Other Key Picks

Realogy Holdings Corp. RLGY currently carries a Zacks Rank of 1. The Zacks Consensus Estimate for 2020 and 2021 earnings per share moved 31.4% and 25.7% north over the past two months to $1.84 and $2.35, respectively.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Exp World Holdings Inc. EXPI currently carries a Zacks Rank of 2 (Buy). The Zacks Consensus Estimate of the company’s 2020 and 2021 earnings per share have been revised 26.8% and 37.2% upward, respectively, over the past two months to 52 cents and 81 cents.

Legacy Housing Corp.’s LEGH earnings estimates for 2020 and 2021 moved 11.9% and 13.8% north over the past 60 days, respectively. It currently has a Zacks Rank 2.

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Jones Lang LaSalle Incorporated (JLL) : Free Stock Analysis Report
Realogy Holdings Corp. (RLGY) : Free Stock Analysis Report
Exp World Holdings, Inc. (EXPI) : Free Stock Analysis Report
Legacy Housing Corporation (LEGH) : Free Stock Analysis Report
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