Shares of Jones Lang LaSalle Inc. JLL — popularly known as JLL — rallied 7.1%, during Tuesday's regular trading session, after the company reported better-than-anticipated results for third-quarter 2019.
The company delivered third-quarter adjusted earnings of $3.52 per share, surpassing the Zacks Consensus Estimate of $2.73. The bottom-line figure also compares favorably with the year-ago adjusted earnings of $3.02 per share.
Revenues for the third quarter came in at around $4.5 billion, outpacing the Zacks Consensus Estimate of $4.35 billion by 3.3%. The reported figure improved 13.2%, year over year. Moreover, fee revenues were up 14.1% year over year to $1.8 billion.
Results highlight robust Real Estate Services revenue growth. The company witnessed solid Americas’ leasing and Capital Markets performance, while Corporate Solutions growth boosted annuity base. The company gained from the HFF Inc. acquisition and progressed well with its integration in the quarter.
Behind the Headline Numbers
During the September-end quarter, JLL’s Real Estate Services revenues climbed 15.5% year over year to $4.4 billion.
In the Americas, revenues and fee revenues came in at $2.7 billion and $1 billion, respectively, indicating 22.1% and 34.8% year-over-year growth. Growth was strong and broad-based across all service lines. This was backed by Capital Markets, mainly reflecting revenue gain from the HFF acquisition. Also, the company witnessed robust leasing performance across a number of U.S. markets and all major asset classes. Further, new project wins and expanded assignments with Corporate Solutions clients drove revenues from Project & Development Services. Segment fee revenue growth, excluding contributions from HFF, was strong at 12%.
Revenues and fee revenues of the EMEA segment came in at $862.6 million and $401.0 million, up 7.1% and 1.1%, respectively, from the year-ago period. Results suggest solid annuity growth in Project & Development Services and Property & Facility Management. However, softness in U.K. Leasing and decline in regional capital markets volumes partly offset these positives.
For the Asia-Pacific segment, revenues and fee revenues came in at $833.8 million and $264.9 million, respectively, marking year-over-year uptick of 5.5% and 5%. Results reflect gains in Capital Markets, steered by large deals in Greater China and growth in Japan. Also, Project & Development Services reported growth, mainly aided by Corporate Solutions project wins across a number of geographical markets. Nevertheless, decline in leasing segment results partly marred the positives.
Revenues from the LaSalle segment plunged 35.3% year over year to $111.6 million. Growth in annuity revenues was more than offset by lower incentive fees.
At the end of third-quarter 2019, assets under management were $67.8 billion, down nearly 1% from the $68.4 billion recorded at the end of the last quarter.
JLL exited the third quarter with cash and cash equivalents of $402.2 million, down from $480.9 million as of Dec 31, 2018.
In addition, the company’s net debt totaled $1.5 billion as of Sep 30, 2019, denoting increases of $589.4 million and $784.0 million from Jun 30, 2019 and Sep 30, 2018, respectively. This hike reflects around $840 million of net cash outflow for the acquisition of HFF.
JLL announced a common stock dividend of 43 cents per share. This dividend will be paid on Dec 13, to shareholders of record on Nov 15, 2019.
Share Repurchase Program
A new share-repurchase program authorizing buyback of up to $200 million of JLL common stock in the open market and privately-negotiated transactions was approved by the company’s board on Oct 31. The latest program cancels and replaces the existing share-repurchase program. Notably, as of Nov 5, 2019, the company has repurchased any shares in 2019 under both the new or prior programs.
We are impressed with JLL’s better-than-anticipated performance in the July-September period. The company has a diversified product & services range which helps register balanced revenue growth across its operating markets. The company’s investment activities, aimed at banking on market consolidations, are anticipated to boost its long-term profitability. Particularly, solid HFF revenue and margin performance during the quarter is encouraging. However, investment volumes are likely to remain soft following a record 2018 as investors have adopted a cautious stance.
JLL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Jones Lang LaSalle Incorporated Price, Consensus and EPS Surprise
Jones Lang LaSalle Incorporated price-consensus-eps-surprise-chart | Jones Lang LaSalle Incorporated Quote
We, now, look forward to the earnings releases of Realogy Holdings Corp. RLGY, The RMR Group Inc. RMR and Legacy Housing Corporation LEGH. While Realogy Holdings is slated to release quarterly numbers on Nov 7, the other two companies too are expected to come up with their earnings releases this month.
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