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4 Reasons to Buy Jones Lang LaSalle (JLL) Stock Right Now

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Shares of Jones Lang LaSalle (JLL - Free Report) , better known as JLL, have been displaying a solid run on the bourse in the past six months. The stock has appreciated 23.6%, outperforming its industry’s increase of 7.6%.

Earlier this month, JLL reported first-quarter 2024 adjusted earnings per share (EPS) of $1.78, beating the Zacks Consensus Estimate of 85 cents. The reported figure increased significantly from the prior-year quarter. Results reflected better-than-anticipated revenues. The company benefited from the continued strength in its resilient lines of business. The quarter saw a rise in most transaction-based businesses.

A positive estimate revision trend reflects optimism for the company’s earnings growth prospects. Over the past week, the Zacks Consensus Estimate for JLL’s 2024 earnings has moved 1.5% north to $12.32 per share.

Zacks Investment Research
Image Source: Zacks Investment Research

The fundamentals appear solid for this Zacks Rank #2 (Buy) stock. Also, there is enough scope for the stock’s price appreciation in the near term, and any hiccup might offer a good entry point.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Let’s now delve into JLL’s strengths.

Reasons to Buy

Robust Scale: JLL is focused on its balanced revenue growth across profitable markets. Its superior client services and strategic investments in technology and innovation are expected to help its market share increase, win relationships and achieve notable growth and a decent cash level. Over the past years, JLL has completed several strategic acquisitions as part of its global growth strategy, thereby expanding its capabilities in several service offerings and boosting its presence in key regional markets.

Moreover, JLL's diversified and resilient platform and cost optimization efforts are expected to support its adjusted EBITDA. Management projects 2024 adjusted EBITDA to be within a range of $950-$1,150 million. We expect fee revenues to increase 2.8% and 11.9% year-over-year in 2024 and 2025, respectively. Adjusted EBITDA margin is projected to be 13.8% in 2024, 15.9% in 2025 and 17.1% in 2026.

Technology platform: JLL’s data-driven and experiential technology platform is providing a competitive edge and is leading to increased client engagements, which is encouraging. The company continues to see strong retention rates in the JLL Technologies Software revenues.

In August 2023, the company launched JLL GPT, the first large language model purpose-built for the commercial real estate industry, to deliver faster and smarter insights to its clients. In July 2022, JLL acquired Envio Systems, a Berlin-based technology company, to boost its sustainable building capabilities. This helped JLL to solve its clients' problems better, faster and more cost-effectively. Further, in August 2021, it acquired artificial intelligence firm Skyline AI.

Through this, clients were provided tools to predict property values, identify new investment opportunities and help them make decisions as to when to raise the rent, renovate or sell the property.

Rise in Outsourcing Business: JLL’s Work Dynamics segment offers a single and cohesive team to clients to bring together services across its service lines and is well-poised 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.

Moreover, 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 has gathered 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. We expect a year-over-year increase of 8.6% in the company’s Work Dynamics' total revenues in 2024.

Strong Balance Sheet & Superior Return on Equity: JLL is focused on maintaining balance sheet strength and adequate liquidity to enjoy operational flexibility. The company exited the first quarter of 2024 with $2.3 billion of liquidity and a net leverage of 1.9X. Over the medium term, the company expects to operate the business toward the middle of the net leverage range of 0.0-2.0X.

JLL also enjoys investment grade ratings, such as Moody’s Baa1 and S&P’s BBB+, which highlight financial and balance sheet strength, enabling the company to borrow at a favorable rate. JLL’s return on equity is 6.55% compared with the industry average of -0.90%. This highlights that the company reinvests more efficiently compared with the industry. Therefore, JLL is well-poised to sail through challenging times and capitalize on solid opportunities.

Other Key Picks

Some other key picks from the real estate operations sector are KE Holdings Inc. (BEKE - Free Report) and Legacy Housing Corporation (LEGH - Free Report) , each sporting a Zacks Rank #1.

KE Holdings’ 2024 revenues are expected to increase 9.02% year over year. The Zacks Consensus Estimate for BEKE’s 2024 EPS has been revised a cent upward in the past week to $1.10.

The Zacks Consensus Estimate for Legacy Housing’s 2024 EPS has moved 36% north to $2.34 in the past month.

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