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Can Jones Lang LaSalle Sustain Growth on Fee Increases?

Zacks Equity Research

Jones Lang LaSalle Inc. (JLL) is riding on the growth trajectory. The company, currently a Zacks Rank #2 (Buy) holder, reported encouraging second-quarter 2014 results. Adjusted earnings came in at $1.68 per share, helped by robust growth in fee revenue. Results comfortably exceeded the Zacks Consensus Estimate of $1.39 and came well above the year-ago quarter figure of $1.15.

The company which shortened its name to “JLL,” reported consolidated fee revenue increase of 18% from the prior-year quarter to $1.1 billion, driven by growth in leasing and Property & Facility Management revenues.

Moreover, recently, JLL announced the acquisition of CLEO Construction Management, as part of its effort to enhance healthcare-oriented real estate services in the West. The company disclosed the buyout of 49% stake in a Kuala Lumpur-based leading transaction and advisory business – YY Property Solutions Sdn Bhd.

We believe that strength in the company’s Leasing and Property & Facility Management lines, strategic acquisitions and investments in recruitment, IT and data would act as the primary growth drivers going forward.

Echoing similar sentiments, over the last 7 days the Zacks Consensus Estimate for 2014 climbed 1.1% to $7.42 per share while that for 2015 advanced 1% to $8.40 per share.

Nevertheless, though these positives bode well for the company’s future, JLL still faces stiff competition from international, regional and local market players. Also, given the globally low interest rate, the markets have consequently stabilized and improved. We anticipate a recovery in the interest rates in the medium term which may lower the growth tempo of the commercial real estate sector and negatively impact JLL’ business activities.

To gain a deeper insight into JLL, you can refer to our updated research report issued on Aug 6, 2014.

Stocks That Warrant a Look

Investors interested in the real estate industry may also consider stocks like FirstService Corporation (FSRV), CBRE Group, Inc. (CBG) and Reis, Inc. (REIS). While FirstService sports a Zacks Rank #1 (Strong Buy), CBRE and Reis hold a Zacks Rank #2 (Buy).

Read the Full Research Report on JLL
Read the Full Research Report on CBG
Read the Full Research Report on FSRV
Read the Full Research Report on REIS

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