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Key Factors to Impact JLL's Performance This Earnings Season

Zacks Equity Research

Jones Lang LaSalle Inc. JLL, better known as JLL, is slated to report first-quarter 2019 results on May 7, before the market opens. The company is anticipated to display year-over-year growth in revenues, while earnings are likely to decline.

In the last reported quarter, this Chicago, IL-headquartered global professional services and investment management firm specializing in real estate, delivered a 26.4% positive earnings surprise. Results highlighted robust double-digit organic Real Estate Services revenue growth, aided by the Leasing and Corporate Solutions segments.

In fact, JLL has surpassed estimates in three of the trailing four quarters and met in the other, coming up with an average positive beat of 29.7%. The graph below depicts this surprise history:

Jones Lang LaSalle Incorporated Price and EPS Surprise

Jones Lang LaSalle Incorporated Price and EPS Surprise | Jones Lang LaSalle Incorporated Quote

Let’s see how things are shaping up for this announcement.

Factors to Consider

JLL is focused on balanced revenue growth across profitable markets. Also, its superior client services and strategic investment in technology and data capabilities offer a competitive advantage over the company’s peers, and are expected to help grow market share and win relationships. In addition, JLL has banked on strategic acquisitions and gained strength to capitalize on an improving market environment.

Particularly, JLL’s Corporate Solutions business, which is the company’s 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 have strengthened JLL’s performance in the quarter under review.

However, after witnessing decent growth in 2018, U.S. capital markets transaction activity was tepid in the first quarter. Moreover, industry-wide leasing volumes have been weak. Nevertheless, the March-end quarter generally marks the slowest quarter seasonally.

Amid these, the Zacks Consensus Estimate for first-quarter 2019 revenues is currently pegged at $3.72 billion, indicating projected growth of 4.6% year over year.

However, JLL’s activities during the January-March quarter did not gain analysts’ confidence. In fact, reflecting the near-term headwinds, the Zacks Consensus Estimate for first-quarter earnings witnessed an 11.5% decrease over the last 30 days and is currently pinned at 69 cents. This also reflects an estimated decline of around 28.9% year over year.

Here is what our quantitative model predicts:

JLL does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for the company is -9.03%.

Zacks Rank: JLL sports a Zacks Rank of 1 (Strong Buy), which increases the predictive power of ESP. However, we also need a positive ESP to be confident of an earnings beat.

Stocks That Warrant a Look

Here are a few stocks in the broader real estate sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:

Investors Real Estate Trust IRET, scheduled to release earnings on May 8, has an Earnings ESP of +3.19% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Global Medical REIT Inc. GMRE, set to report quarterly numbers on May 8, has an Earnings ESP of +1.65% and carries a Zacks Rank of 3, currently.

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Jones Lang LaSalle Incorporated (JLL) : Free Stock Analysis Report
Investors Real Estate Trust (IRET) : Free Stock Analysis Report
Global Medical REIT Inc. (GMRE) : Free Stock Analysis Report
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