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Jones Lang LaSalle (JLL) Up 6.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Jones Lang LaSalle (JLL - Free Report) . Shares have added about 6.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Jones Lang LaSalle due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Jones Lang LaSalle Q1 Earnings & Revenues Top Estimates
Jones Lang reported first-quarter 2021 adjusted earnings of $2.10 per share, handily beating the Zacks Consensus Estimate of 60 cents. Revenues for the quarter came in at $4.04 billion, surpassing the Zacks Consensus Estimate of $3.75 billion.
Continued strength of Americas Corporate Solutions helped drive Property & Facility Management growth, while transaction-based service lines reflect improving economic conditions, highlighted by solid recovery in Asia Pacific. Moreover, the company’s overall margin expansion included valuation increases to JLL Technologies' strategic proptech investments, Year-over-year changes in loan loss credit reserves and the fair value of LaSalle's co-investment portfolio as well as cost-mitigation benefits.
According to Christian Ulbrich, JLL CEO, "Our strong first-quarter results demonstrated JLL's commitment to delivering value to stakeholders across our global, scaled platform and reflected our investments in technology growth initiatives while prudently managing expenses."
On a year-over-year basis, first-quarter adjusted earnings per share were well above the 49 cents reported in the prior-year quarter.
However, revenues edged down 1% year on year, while fee revenues slipped 4% year over year to $1.4 billion. Apart from this, adjusted EBITDA margin, calculated on a fee-revenue basis, was 13.2% compared with the prior-year quarter’s 6.4%.
Behind the Headline Numbers
During the March-end quarter, JLL’s Real Estate Services (RES) revenues dropped 1% year over year to $3.95 billion. Results reflect the continued impact of the pandemic. Particularly, decent growth in Asia Pacific was more than offset by declines in Americas and EMEA. In addition, Corporate Solutions continued to deliver stable fee revenue performance as strength in facilities management offset the decline in Project & Development Services.
In the Americas, revenues and fee revenues came in at $2.4 billion and $832.7 million, respectively, reflecting a 3% and 9% year-over-year decline. While the Americas transaction-based service lines continued to be affected by the pandemic, the decline in U.S. leasing was particularly less significant than the recent quarters. Also, soft investment sales and debt placement activity hurt Capital Market revenues, while the multi-family business continued to deliver a stable revenue performance. Also, new client wins and expansions of existing Corporate Solutions client relationships helped the Property & Facility Management segment register stellar revenue and fee revenue growth.
Revenues and fee revenues of the EMEA segment came in at $716.2 million and $311.5 million, down 5% and 0.3%, respectively, from the year-ago period, reflecting the adverse impact of the pandemic. This region reported largely stable transaction-based revenues as substantial growth in some geographies, highlighted by Switzerland, was offset by geographies that witnessed more restrictive lock-down measures. Decline in Project & Development Services reflect lower activity in the fit-out business and substantial prior-year project activity in MENA that did not repeat this quarter. Apart from this, Property & Facility Management was affected by a decrease in fee revenues from the U.K. mobile engineering business.
For the Asia-Pacific segment, revenues and fee revenues came in at $785.8 million and $213.2 million, respectively, marking a year-over-year increase of 10% and 20%. Rebound in transaction-based revenues, along with continued stability in Corporate Solutions, aided double-digit fee revenue growth. Revenue expansion in Capital Markets were driven by an increase in large-deal transactions, mainly in Singapore and Australia. A pick-up in office volumes, principally in Greater China drove leasing. Solid expansion in Valuations Advisory, particularly in Greater China and Australia, steered Advisory, Consulting and Other performance.
Revenues in the LaSalle segment slid 13% year over year to $91.2 million, while fee revenues declined 13% to $85.3 million. Pandemic-driven valuation declines in assets under management over the trailing 12 months largely attributed to this decline in LaSalle advisory fees. Moreover, transaction and incentive fees underlined decreased acquisition/transaction activity in 2021.
At the end of first-quarter 2021, assets under management were $70.9 billion, up 3% from the last quarter end, reflecting acquisitions, foreign-currency increases and net valuation increases, partially offset dispositions and withdrawals.
Liquidity
JLL exited first-quarter 2021 with cash and cash equivalents of $456.6 million, down from $574.3 million as of Dec 31, 2020. Additionally, as of Mar 31, 2021, the company’s net debt amounted to $670.3 million, marking an increase of $478.2 million from the end of December, reflecting typical seasonality, driven by annual incentive compensation payments made in the first quarter. However, it declined $843.2 million from Mar 31, 2020 due to substantial cash collections in 2020 as well as lower incentive compensation payments this year compared with the prior-year period.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 51.94% due to these changes.
VGM Scores
Currently, Jones Lang LaSalle has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Jones Lang LaSalle has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Jones Lang LaSalle (JLL) Up 6.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Jones Lang LaSalle (JLL - Free Report) . Shares have added about 6.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Jones Lang LaSalle due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Jones Lang LaSalle Q1 Earnings & Revenues Top Estimates
Jones Lang reported first-quarter 2021 adjusted earnings of $2.10 per share, handily beating the Zacks Consensus Estimate of 60 cents. Revenues for the quarter came in at $4.04 billion, surpassing the Zacks Consensus Estimate of $3.75 billion.
Continued strength of Americas Corporate Solutions helped drive Property & Facility Management growth, while transaction-based service lines reflect improving economic conditions, highlighted by solid recovery in Asia Pacific. Moreover, the company’s overall margin expansion included valuation increases to JLL Technologies' strategic proptech investments, Year-over-year changes in loan loss credit reserves and the fair value of LaSalle's co-investment portfolio as well as cost-mitigation benefits.
According to Christian Ulbrich, JLL CEO, "Our strong first-quarter results demonstrated JLL's commitment to delivering value to stakeholders across our global, scaled platform and reflected our investments in technology growth initiatives while prudently managing expenses."
On a year-over-year basis, first-quarter adjusted earnings per share were well above the 49 cents reported in the prior-year quarter.
However, revenues edged down 1% year on year, while fee revenues slipped 4% year over year to $1.4 billion. Apart from this, adjusted EBITDA margin, calculated on a fee-revenue basis, was 13.2% compared with the prior-year quarter’s 6.4%.
Behind the Headline Numbers
During the March-end quarter, JLL’s Real Estate Services (RES) revenues dropped 1% year over year to $3.95 billion. Results reflect the continued impact of the pandemic. Particularly, decent growth in Asia Pacific was more than offset by declines in Americas and EMEA. In addition, Corporate Solutions continued to deliver stable fee revenue performance as strength in facilities management offset the decline in Project & Development Services.
In the Americas, revenues and fee revenues came in at $2.4 billion and $832.7 million, respectively, reflecting a 3% and 9% year-over-year decline. While the Americas transaction-based service lines continued to be affected by the pandemic, the decline in U.S. leasing was particularly less significant than the recent quarters. Also, soft investment sales and debt placement activity hurt Capital Market revenues, while the multi-family business continued to deliver a stable revenue performance. Also, new client wins and expansions of existing Corporate Solutions client relationships helped the Property & Facility Management segment register stellar revenue and fee revenue growth.
Revenues and fee revenues of the EMEA segment came in at $716.2 million and $311.5 million, down 5% and 0.3%, respectively, from the year-ago period, reflecting the adverse impact of the pandemic. This region reported largely stable transaction-based revenues as substantial growth in some geographies, highlighted by Switzerland, was offset by geographies that witnessed more restrictive lock-down measures. Decline in Project & Development Services reflect lower activity in the fit-out business and substantial prior-year project activity in MENA that did not repeat this quarter. Apart from this, Property & Facility Management was affected by a decrease in fee revenues from the U.K. mobile engineering business.
For the Asia-Pacific segment, revenues and fee revenues came in at $785.8 million and $213.2 million, respectively, marking a year-over-year increase of 10% and 20%. Rebound in transaction-based revenues, along with continued stability in Corporate Solutions, aided double-digit fee revenue growth. Revenue expansion in Capital Markets were driven by an increase in large-deal transactions, mainly in Singapore and Australia. A pick-up in office volumes, principally in Greater China drove leasing. Solid expansion in Valuations Advisory, particularly in Greater China and Australia, steered Advisory, Consulting and Other performance.
Revenues in the LaSalle segment slid 13% year over year to $91.2 million, while fee revenues declined 13% to $85.3 million. Pandemic-driven valuation declines in assets under management over the trailing 12 months largely attributed to this decline in LaSalle advisory fees. Moreover, transaction and incentive fees underlined decreased acquisition/transaction activity in 2021.
At the end of first-quarter 2021, assets under management were $70.9 billion, up 3% from the last quarter end, reflecting acquisitions, foreign-currency increases and net valuation increases, partially offset dispositions and withdrawals.
Liquidity
JLL exited first-quarter 2021 with cash and cash equivalents of $456.6 million, down from $574.3 million as of Dec 31, 2020. Additionally, as of Mar 31, 2021, the company’s net debt amounted to $670.3 million, marking an increase of $478.2 million from the end of December, reflecting typical seasonality, driven by annual incentive compensation payments made in the first quarter. However, it declined $843.2 million from Mar 31, 2020 due to substantial cash collections in 2020 as well as lower incentive compensation payments this year compared with the prior-year period.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 51.94% due to these changes.
VGM Scores
Currently, Jones Lang LaSalle has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Jones Lang LaSalle has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.