Shares of Jones Lang LaSalle JLL, better known as JLL, put up a solid performance over the past six months, with the stock appreciating 25.2% compared with its industry 13.9% growth.
The company has been a steady performer, with an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the trailing four quarters. Results highlight robust Real Estate Services’ revenue growth. The company gained from the HFF Inc. acquisition and has progressed well with its integration.
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. Let’s now delve deeper into its 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 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. Last July, JLL announced the conclusion of the HFF Inc. acquisition, as part of its effort to substantially boost the Capital Markets business. Moreover, the company completed two new strategic acquisitions — Latitude Real Estate Investors and Corporate Concierge Services — in first-quarter 2019.
Growing Outsourcing Business: The company’s Corporate Solutions business, which is its multi-service outsourcing business, and 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 awards and expansion of services with existing clients are likely to strengthen JLL’s performance in the upcoming period.
Cash Flow Growth: JLL enjoyed historical cash flow growth (three to five years) of 14.6%, which comfortably exceeded 9.9% growth registered by the industry. Moreover, its current cash flow growth of roughly 27% compares favorably with the 12.1% increase estimated for the industry.
Strong Balance Sheet and Superior Return on Equity (ROE): JLL’s robust balance sheet helps manage debt-level efficiently. The company enjoys revolving credit facility of $2.75 billion that will mature in 2023, enhancing its financial flexibility. Moreover, the company enjoys investment grade ratings — Moody’s: Baa1 and S&P: BBB+ — which reflects financial and balance-sheet strength. In addition, JLL’s ROE is 15.64% compared with the industry average of 4.17%. This highlights that the company reinvests more efficiently compared to the industry.
Estimate Revision Trends: Additionally, a positive trend in estimate revisions reflects optimism in the company’s earnings growth prospects. Over the past two month, the Zacks Consensus Estimate for JLL’s 2019 and 2020 earnings have moved 7.1% and 4.4% north, respectively, to $13.18 and $13.67. The figures also indicate projected growth of 7.6% and 3.7%, respectively.
Other Key Picks
CBRE Group CBRE currently carries a Zacks Rank of 2 (Buy). The Zacks Consensus Estimate for its ongoing-year earnings has been revised 1.2% upward to $4.12 in two months’ time. The stock has rallied 16.1% over the past six months.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Infrastructure and Energy Alternatives, Inc. IEA currently carries a Zacks Rank of 2. The consensus estimate for its 2020 earnings more than doubled to 23 cents over the past 60 days. The company’s shares have gained 26.1% over the past six months.
RE/MAX Holdings, Inc.’s RMAX earnings estimates for the current year moved 1.4% north to $2.25 over the past 30 days. Shares of this Zacks #2 Ranked company have gained 19.7% in six months’ time.
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