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5 Reasons to Add Jones Lang LaSalle to Your Portfolio Now

Zacks

Jones Lang LaSalle JLL, popularly known as JLL, enjoys the vast knowledge of real estate markets and a spate of strategic investment activities. Further, market share expansion is likely to aid JLL to achieve strong growth as well as a decent cash level.

A positive trend in estimate revisions reflects optimism over the company’s earnings growth prospects. The Zacks Consensus Estimate for JLL’s 2018 earnings has inched up 5.2% over the last 30 days. As a result, the stock currently carries a Zacks Rank #2 (Buy).

The stock has surged 12% over the past three months, widely outperforming the industry’s decline of 2.6%.


In fact, the rally is anticipated to continue in the near term as well, as there are a number of favorable factors.

Earnings per Share Strength: JLL recorded an earnings growth rate of 10.2% over the last three to five years compared with 2.9% growth of the industry it belongs to. The company’s earnings growth rate for 2018 is anticipated to be 7.5%. Moreover, the long-term (three-five years) expected EPS growth of 11% promises rewards for shareholders.

The company also has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in all of the trailing four quarters. It delivered an average positive surprise of 21.4% for this period. It also has a Growth Score of B. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best upside potential.

Organic & Inorganic Growth: JLL invests strategically so as to capitalize on market consolidations. The company’s superior operating platform and market share expansion have helped it achieve strong growth. Importantly, the company achieved compound annual fee revenue growth of 12% over the last ten years ending Dec 31, 2017. This was driven by both organic growth and contribution from mergers and acquisitions. The company’s revenues are projected to grow 7.1% in 2018 against the industry’s growth of 3.7%.

Further, the company has made more than 110 mergers and acquisitions since 2005 through 2017. This included five strategic acquisitions in 2017 itself. Moreover, the company is increasingly investing in technology and data capabilities, which is likely to enable JLL to enjoy a competitive advantage over its peers. Such strategic acquisitions are likely to help the company gain strength to capitalize on an improving market environment.

Steady Capital Deployment: JLL has been consistently raising dividend since 2011 and aiming at enhancing shareholders’ value. Concurrent with first-quarter 2017 earnings, the company announced a semi-annual dividend of 35 cents per share on its common stock, marking a 6% hike over the last payment. Again, during the third-quarter earnings release, JLL’s board of directors announced a dividend of 37 cents per share, reflecting a 5.7% increase from the previous payout. Subsequently, dividends for 2017 totaled 72 cents, a 13% increase from the year-ago figure. Given its financial strength and lower payout ratio, this dividend payment is expected to be sustainable.

Superior Return on Equity (ROE): JLL’s ROE of 13.6% compared with the industry average of 3.9% reflects the company’s commendable position over its peers.

Strong Balance Sheet: 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 Jun 2021. In fact, at the end of the fourth quarter, the company’s net debt was $586.2 million, down $426.6 million from the prior-quarter end. This reflects a significant improvement in its 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.

Other Stocks to Consider

Investors interested in the real estate industry can also consider other top-ranked stocks like HFF, Inc. HF, The RMR Group Inc. RMR and CBRE Group, Inc. CBG. While HFF and RMR sport a Zacks Rank of 1, CBRE Group carries a Zacks Rank of 2. You can see the complete list of today’s Zacks Rank #1 stocks here.

HFF’s earnings per share estimates for 2018 have been revised 22.6% upward to $2.88 over the past month. The stock has gained 5.2% during the past three months.

RMR Group’s earnings per share estimates for the current year have inched up 84.2% to $6.08 in a month’s time. Its shares have gained 13.8% over the past three months.

CBRE Group’s Zacks Consensus Estimate for 2018 earnings per share has been revised 7.5% upward to $3.04 over the past month. The company’s share price has risen 7.2% in three months’ time.

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