Shares of Jones Lang LaSalle (JLL - Free Report) — popularly known as JLL — have been displaying a decent performance, of late. The stock has risen 18.2% over the past month compared with the 2.4% increase of its industry.
In fact, the rally is anticipated to continue in the near term as well, as there are a number of favorable factors.
JLL’s top line has been exhibiting strength for the past several years. The company is focused on balanced revenue growth across profitable markets. In fact, it achieved compound annual fee revenue growth of 13% during 1999-2016. This was driven by both organic growth, and contribution from mergers and acquisitions. For 2017, the company anticipates fee revenue growth of 8-11%. Solid growth continued in the current year as well, with fee revenues registering an increase of 15.6% in the first nine months of the year.
Additionally, with the current-year projected sales growth rate of 13.1% compared with a break-even level for the industry, we anticipate robust bottom-line performance as sales growth is usually an indicator of a company's future earnings performance.
JLL has banked on strategic acquisitions to enhance its business scale in key regions. The company has made more than 100 mergers and acquisitions since 2005 through 2016. Further, during the first nine months of 2017, it completed five strategic acquisitions. Such acquisitions are likely to help the company gain strength to capitalize on the improving market environment. Moreover, going forward, we anticipate increased investments in data and technology platforms will differentiate the company from its competitors.
JLL’s robust balance sheet helps it manage debt-level in an efficient way. The company enjoys unsecured revolving credit facility of $2.75 billion, set to mature in June 2021. In fact, at the end of the third quarter, the company’s net debt was $1 billion, down $254 million from the prior-quarter end. This reflects a significant improvement in JLL’s business performance and working capital management. Armed with a solid balance sheet and healthy debt position, the company remains well poised to continue with its growth momentum.
Encouragingly, JLL witnessed 11.4% growth in EPS over the last three to five years against the industry’s 3.1% ascend. Also, earlier this month, it delivered a better-than-expected performance for the third quarter, recording a positive earnings surprise of 26.5%. Results highlighted robust organic growth and strong cash flows from operations.
In fact, the company has been a steady performer, having beaten the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 17.8%. Its projected EPS growth rate for the current year is around 1.3%, which is better than the 2.2% decline estimated for the industry.
JLL’s Return on Equity (ROE) ratio is 12.55% compared with the industry’s average of 3.24%. This indicates that the company reinvests more efficiently compared to the industry.
Additionally, this Zacks Rank #1 (Strong Buy) stock has witnessed solid positive earnings estimate revisions. In fact, the Zacks Consensus Estimate for the current-year earnings has been revised 2.7% upward in a month’s time. Also, the estimate for 2018 climbed 3.9% to $8.96 during the same time frame. This reflects analysts’ bullish sentiments on the stock. Given its progress on fundamentals, the stock is likely to keep performing well in the quarters ahead.
Other Stocks to Consider
Investors interested in the real estate industry can also consider other top-ranked stocks like FirstService Corporation (FSV - Free Report) , CBRE Group, Inc. , and HFF, Inc. (HF - Free Report) . While FirstService Corporation sports a Zacks Rank of 1, CBRE Group and HFF carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The 2017 Zacks Consensus Estimate for FirstService Corporation is pegged at $1.99 — indicating an increase of 1% in two months’ time.
The Zacks Consensus Estimate for current-year earnings of CBRE Group moved up 3.9% to $2.67 over the past month.
The Zacks Consensus Estimate for full-year 2017 earnings of HFF moved up 3.5% to $2.36 in a month’s time.
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