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Why Is Jones Lang LaSalle (JLL) Down 1.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for Jones Lang LaSalle (JLL - Free Report) . Shares have lost about 1.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Jones Lang LaSalle due for a breakout? 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 Tops Q4 Earnings and Revenue Estimates

JLL reported fourth-quarter 2018 adjusted earnings of $5.99 per share, surpassing the Zacks Consensus Estimate of $4.74. The bottom line compares favorably with the year-ago adjusted earnings of $4.53 per share.

Revenues for the reported quarter came in at around $4.89 billion, outpacing the Zacks Consensus Estimate of $4.71 billion. The reported figure improved 12.6%, year over year. Fee revenues were up 13.5% year over year to $2.1 billion.

Results highlight robust double-digit organic Real Estate Services revenue growth, aided by Leasing and Corporate Solutions segments. Further, the Americas’ segment performance, LaSalle incentive fees and EMEA improvement helped expand margin. In addition, assets under management reached a record $60.5 billion, driven by LaSalle private equity capital raise.

Behind the Headline Numbers

During the quarter under review, JLL’s Real Estate Services revenues climbed 11% year over year to $4.7 billion. In the Americas, revenues and fee revenues came in at $2.7 billion and $1.0 billion, respectively, indicating 16% and 22% year-over-year growth.

This was backed by growth in the leasing, reflecting momentum in the New York, Midwest and Northwest U.S. markets. Also, the Property & Facility Management segment reported growth as a result of ramp-up of recent wins, along with expansion of present facilities management relationships with Corporate Solutions clients.

Revenues and fee revenues of the EMEA segment came in at $1.06 billion and $574.1 million, up 6% and 2%, respectively, from the year-ago period. Results reflect growth in Property & Facility Management segment as a result of the stabilization of Integral.

For the Asia-Pacific segment, revenues and fee revenues came in at $934.3 million and $351.7 million, respectively, marking year-over-year jump of 5% and a decline of 2%, respectively. Results highlight improved revenues from Property & Facility Management due to new business and expansion of client mandates, as well as growing leasing revenues, mainly from office and industrial sectors in Greater China and Australia.

Revenues from the LaSalle Investment Management segment recorded rise of 63% year over year to $150.3 million. Strong incentive fees due to real estate dispositions on behalf of clients, mainly in the Asia Pacific, attributed to this increase.

At the end of 2018, assets under management were $60.5 billion, up 2% from $59.5 billion recorded at the end of the last reported quarter.

Liquidity

Jones Lang exited the reported quarter with cash and cash equivalents of $480.9 million, up from $268 million as of Dec 31, 2017. Moreover, reflecting continued strong cash generation by the company, the company’s net debt totaled $289.3 million at the end of 2018, denoting decline of $453.5 million and $296.9 million from Sep 30, 2018 and Dec 31, 2017, respectively.
 

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -40.7% due to these changes.

VGM Scores

Currently, Jones Lang LaSalle has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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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