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Jones Lang LaSalle (JLL) Down 3.3% Since Last Earnings Report: Can It Rebound?

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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 3.3% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Jones Lang LaSalle Q2 Earnings Beat Estimates

Jones Lang LaSalle reported second-quarter adjusted earnings of $2.94 per share, surpassing the Zacks Consensus Estimate of $2.33. The bottom-line figure also compared favorably with the year-ago adjusted earnings of $2.26 per share.

Revenues for the reported quarter came in at around $4.27 billion, outpacing the Zacks Consensus Estimate of $4.1 billion. The reported figure improved 9%, year over year. Moreover, fee revenues were up 9% year over year to $1.6 billion.

Results highlight robust Real Estate Services revenue growth. The company witnessed solid Americas’ leasing performance, while Corporate Solutions growth across all geographies boosted annuity base. Also, Capital Markets investment sales outpaced the decline in market volumes.

Behind the Headline Numbers

During the reported quarter, JLL’s Real Estate Services revenues climbed 9% year over year to $4.1 billion.

In the Americas, revenues and fee revenues came in at $2.5 billion and $863.9 million, respectively, indicating 14% and 12% year-over-year growth. Growth was strong and broad-based across all service lines. This was backed by Property & Facility Management mainly owing to the ramp-up of recent wins as well as expansion of existing facilities management relationships with U.S. Corporate Solutions clients. Additionally, leasing drove segment fee revenue growth backed by the Southeast and mid-Atlantic U.S. markets, and throughout all key asset categories. Further, solid growth in both investment sales and debt placement aided capital markets’ performance.

Revenues and fee revenues of the EMEA segment came in at $818.3 million and $379.9 million, down 3% and 2%, respectively, from the year-ago period. Results reflect softness in capital markets and leasing.

For the Asia-Pacific segment, revenues and fee revenues came in at $855.2 million and $262.9 million, respectively, marking year-over-year jump of 5% for both. Results suggest growth in revenues and fee revenues across all services lines that mirrored a double-digit increase in leasing, and growth in Property & Facility Management due to new client wins and expansion of existing client mandates.

Revenues from the LaSalle segment recorded an increase of 41% year over year to $129.4 million. This was contributed by higher incentive fees, associated with real estate dispositions in Asia Pacific on behalf of clients, and considerable growth in advisory fees. At the end of second-quarter 2019, assets under management were $68.4 billion, up 6% from $64.3 billion recorded at the end of the last quarter.

Liquidity

JLL exited the reported quarter with cash and cash equivalents of $411.2 million, up from the $389.5 million as of Mar 31, 2019. Moreover, the company’s net debt totaled $937.4 million as of June 30, 2019, denoting a decline of $42.7 million and $35.2 million from Mar 31, 2019, and Jun 30, 2018, respectively.

How Have Estimates Been Moving Since Then?

Estimates revision followed a flat path over the past two months.

VGM Scores

At this time, Jones Lang LaSalle has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile 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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