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Jones Lang LaSalle (JLL) Q2 Earnings Surpass, Stock Down

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Jones Lang LaSalle Inc. (JLL - Free Report) — popularly known as JLL — reported second-quarter 2018 adjusted earnings of 2.26 per share, in line with the Zacks Consensus Estimate. The bottom line compares favorably with the year-ago adjusted earnings of $2.17 per share.

Revenues for the reported quarter came in at $3.9 billion, surpassing the Zacks Consensus Estimate of $3.7 billion. The reported figure improved 12.4% year over year. Fee revenues were up 13% year over year to $1.5 billion.

Results highlight robust organic growth and strong cash flows from operations. The company experienced Real Estate Services revenue growth. Moreover, the company achieved improvement in fee revenues across the Americas and LaSalle.

Shares of JLL declined 8.8% to $155.32, during the regular trading session on Aug 8.

Behind the Headline Numbers

During the quarter under review, JLL’s Real Estate Services revenues climbed 12% year over year to $3.8 billion. In the Americas, revenues and fee revenues came in at $2.1 billion and $768.2 million, respectively, indicating 12% year-over-year growth. Results were driven by Property & Facility Management, and U.S. Leasing revenue growth.

Revenues and fee revenues of the EMEA segment were $846.6 million and $388.3 million, up 11% and 5%, respectively, from the year-ago period. This was backed by growth in the Property & Facility Management and Project & Development Services segment.

For the Asia-Pacific segment, revenues and fee revenues came in at $1.5 billion and $445.7 million, respectively, marking year-over-year jump of 8% and 10%. Robust investment sales performance in Japan and Singapore, as well as performance in the Advisory, Consulting and Other segment attributed to this growth.

Revenues from the LaSalle Investment Management segment witnessed rise of 26% year over year to $91.7 million. Strong incentive fees due to real estate dispositions in the Asia Pacific led to the increase. At the end of the June-end quarter, assets under management were $59.9 billion, up from $59 billion recorded at the end of the last reported quarter.

Liquidity

Jones Lang exited the reported quarter with cash and cash equivalents of $292.8 million, up from $268 million as of Dec 31, 2017. At the end of second-quarter 2018, the company’s net debt totaled $972.6 million, up $62.5 million from the prior-quarter end.

Our Viewpoint

In the April-June quarter, JLL witnessed strong organic growth across its business segments. Going forward, market-share expansion will help JLL achieve stellar growth and a decent cash level. Further, vast knowledge of real estate markets and a spate of strategic investment activities, in a bid to capitalize on market consolidations, are anticipated to drive long-term profitability.

Nevertheless, unfavorable currency movements and interest rate hikes may negatively impact the company’s performance. Additionally, stiff competition from international, regional and local players also remains a concern.

Currently, JLL carries a Zacks Rank #3 (Hold).

Key Picks

Investors can consider some better-ranked stocks in the broader real estate space like CBRE Group (CBRE - Free Report) , Colliers International Group Inc. (CIGI - Free Report) and Marcus and Millichap, Inc (MMI - Free Report) . While Marcus and Millichap sports a Zacks Rank #1 (Strong Buy), CBRE and Colliers International carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

CBRE’s 2018 earnings per share estimates inched up 1.2% to $3.14 in a month’s time.

Colliers International’s earnings per share estimates for 2018 moved up 3.9% to $3.74 over the past 30 days.

Marcus and Millichap’s 2018 earnings per share estimates remained unchanged at $2.04 in a month’s time.

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