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Here's Why You Should Retain Jones Lang (JLL) Stock Now
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Jones Lang LaSalle Incorporated (JLL - Free Report) , popularly known as JLL, is likely to benefit from the continued strength of its resilient lines of business and favorable outsourcing trends. However, persistent macroeconomic uncertainty and a high interest rate environment have kept JLL’s transaction-based businesses in distress.
What’s Aiding It?
JLL is poised to benefit from its wide range of real estate products and services offerings, as well as extensive knowledge of domestic and international real estate markets, thus enabling it to operate as a single-source provider of real estate solutions. The company is focused on balanced revenue growth across profitable markets.
Its superior client services and strategic investment in technology and innovation are expected to help grow market share and win relationships. Strategic investments in the technology front helped the company navigate challenging times.
Moreover, JLL's diversified and resilient platform and cost optimization efforts are expected to support its adjusted EBITDA. Management projects 2024 adjusted EBITDA margin, excluding equity earnings, to be within the range of 12.5% to 14.5%.
JLL’s Work Dynamics segment is well-positioned to benefit from favorable trends in the outsourcing business. Corporations are looking for the company’s wide-ranging knowledge and the breadth of its services, including sustainability.
In the post-pandemic period, this trend for organizations to outsource real estate services while progressively looking for strategic advice on reimagining their workspaces and workstyles to boost culture, attract talent and drive performance is likely to gain more strength.
Amid the rising trend of outsourcing real estate needs by companies, new contract wins and the expansion of services with existing clients are likely to aid JLL’s performance in the upcoming period.
JLL is focused on maintaining balance sheet strength and adequate liquidity to enjoy operational flexibility. The company exited the fourth quarter of 2023 with $3.1 billion of liquidity and a net leverage of 1.6X. It also enjoyed investment grade ratings of Baa1 from Moody’s and BBB+ from S&P Global, which highlight the financial and balance-sheet strength, enabling the company to borrow at a favorable rate.
Shares of this Zacks Rank #3 (Hold) company have rallied 14.4% in the past three months compared with the industry’s growth of 7.8%.
Image Source: Zacks Investment Research
What’s Hurting It?
Persistent macroeconomic uncertainty and geopolitical unrest have resulted in an uneven recovery in the global economy. Capital markets have also slowed down due to restrictive underwriting assumptions and rising debt costs amid a high interest rate environment.
Occupiers continue to adopt a cautious approach under present market circumstances, awaiting greater price discovery and causing a delay in the closing timeline for transactions. As a result, an industry-wide slowdown in investment sales and leasing activity across several asset types has led to underperformance in the company’s transaction-based businesses over the past few quarters and is likely to continue to be adversely impacted in the near term.
Competition from other real estate service providers and institutional players on the international, regional and local ground is a concern for JLL. Also, some of them are larger on a regional or local basis or have a stronger position in a specific market segment or service offering. This could curb JLL’s ability to raise fees, affecting profitability.
Image: Shutterstock
Here's Why You Should Retain Jones Lang (JLL) Stock Now
Jones Lang LaSalle Incorporated (JLL - Free Report) , popularly known as JLL, is likely to benefit from the continued strength of its resilient lines of business and favorable outsourcing trends. However, persistent macroeconomic uncertainty and a high interest rate environment have kept JLL’s transaction-based businesses in distress.
What’s Aiding It?
JLL is poised to benefit from its wide range of real estate products and services offerings, as well as extensive knowledge of domestic and international real estate markets, thus enabling it to operate as a single-source provider of real estate solutions. The company is focused on balanced revenue growth across profitable markets.
Its superior client services and strategic investment in technology and innovation are expected to help grow market share and win relationships. Strategic investments in the technology front helped the company navigate challenging times.
Moreover, JLL's diversified and resilient platform and cost optimization efforts are expected to support its adjusted EBITDA. Management projects 2024 adjusted EBITDA margin, excluding equity earnings, to be within the range of 12.5% to 14.5%.
JLL’s Work Dynamics segment is well-positioned to benefit from favorable trends in the outsourcing business. Corporations are looking for the company’s wide-ranging knowledge and the breadth of its services, including sustainability.
In the post-pandemic period, this trend for organizations to outsource real estate services while progressively looking for strategic advice on reimagining their workspaces and workstyles to boost culture, attract talent and drive performance is likely to gain more strength.
Amid the rising trend of outsourcing real estate needs by companies, new contract wins and the expansion of services with existing clients are likely to aid JLL’s performance in the upcoming period.
JLL is focused on maintaining balance sheet strength and adequate liquidity to enjoy operational flexibility. The company exited the fourth quarter of 2023 with $3.1 billion of liquidity and a net leverage of 1.6X. It also enjoyed investment grade ratings of Baa1 from Moody’s and BBB+ from S&P Global, which highlight the financial and balance-sheet strength, enabling the company to borrow at a favorable rate.
Shares of this Zacks Rank #3 (Hold) company have rallied 14.4% in the past three months compared with the industry’s growth of 7.8%.
Image Source: Zacks Investment Research
What’s Hurting It?
Persistent macroeconomic uncertainty and geopolitical unrest have resulted in an uneven recovery in the global economy. Capital markets have also slowed down due to restrictive underwriting assumptions and rising debt costs amid a high interest rate environment.
Occupiers continue to adopt a cautious approach under present market circumstances, awaiting greater price discovery and causing a delay in the closing timeline for transactions. As a result, an industry-wide slowdown in investment sales and leasing activity across several asset types has led to underperformance in the company’s transaction-based businesses over the past few quarters and is likely to continue to be adversely impacted in the near term.
Competition from other real estate service providers and institutional players on the international, regional and local ground is a concern for JLL. Also, some of them are larger on a regional or local basis or have a stronger position in a specific market segment or service offering. This could curb JLL’s ability to raise fees, affecting profitability.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Iron Mountain (IRM - Free Report) and NewMark Group (NMRK - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for IRM’s 2024 funds from operations (FFO) per share is pegged at $4.38, suggesting year-over-year growth of 6.3%.
The Zacks Consensus Estimate for NMRK’s 2024 earnings per share stands at $1.12, indicating an increase of 6.7% from the year-ago quarter.