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Here's Why You Should Hold Jones Lang LaSalle (JLL) Stock Now

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Jones Lang LaSalle Inc. (JLL - Free Report) — popularly known as JLL — has a broad range of real estate product and services as well as an extensive knowledge of domestic and international real estate markets. The company is focused on balanced revenue growth across potential markets. Also, its superior client services and investments in technology and innovation are expected to help grow market share and win relationships. Moreover, the company’s prudent cost management efforts are likely to support its bottom-line performance.

Further, the company’s Corporate Solutions business is well poised to capitalize on the favorable trends. Amid the 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 resiliency as a scaled global platform and the business keeps generating new client wins and expansions, which include advising on reentry strategies and protocols.The company enjoys a robust scale and healthy outsourcing business and is among the few companies, along with CBRE Group (CBRE - Free Report) , offering a vast suite of services to clients.

JLL is also focused on maintaining balance-sheet strength and adequate liquidity to enjoy operational flexibility. 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 third quarter with $2.8 billion of liquidity, including roughly $440 million of cash and 85% of capacity available on its $2.75 billion revolver.

Hence, with a solid balance sheet and sufficient financial flexibility as well as manageable debt maturities, JLL is well poised to sail through the challenging times and bank on solid opportunities.

Shares of this Zacks Rank #3 (Hold) company have gained 26.2% over the past three months, underperforming the industry’s rally of 30.8%. However, the recent trend in earnings estimates revisions for the current year indicates a favorable outlook for JLL, as estimates have moved 31.4% north over the past month. Therefore, given the progress on fundamentals and upward estimate revisions, the stock has decent upside potential for the near term.


 

However, the pandemic has resulted in uncertainty, interruption of business activities and substantial impact on global markets as well as on consumer and business sentiment. Though economic growth rebounded in the third quarter, in many countries the pace of recovery is expected to be slower with the unwinding of fiscal stimulus as well as the cautious approach of households and businesses. In fact, a significant improvement is unlikely until the health crisis is resolved.

Particularly, in third-quarter 2020, direct commercial real estate investment totaled $149 billion, plunging 44% year on year. JLL too has not been spared and the company’s quarterly results reflect the adverse impact of the coronavirus pandemic on its top line, with transaction-based service lines being hit hard due to delays in leasing and capital market transactions.

While there has been an improvement in pipelines in both leasing and capital markets since the end of June, there remains uncertainty with the length of the pandemic and its impact on decision-making by corporate occupiers and investors. Also, there is stiff competition from regional and local players.

Stocks to Consider

FirstService Corporation (FSV - Free Report) currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2020 earnings per share moved 7.2% north to $3.27 over the past month, reflecting positive sentiments.You can see the complete list of today’s Zacks #1 Rank stocks here.

eXp World Holdings, Inc. (EXPI - Free Report) carries a Zacks Rank #2 (Buy), at present. The Zacks Consensus Estimate for 2020 earnings per share moved 36.7% upward to 41 cents.

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