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Jones Lang LaSalle (JLL) Tops Q2 Earnings, Revenue Estimates

Jones Lang LaSalle Inc. JLL reported second-quarter 2017 adjusted earnings of $1.82 per share, beating the Zacks Consensus Estimate of $1.45. However, the bottom line came in lower than the year-ago adjusted earnings of $1.93 per share.

Based on strong leasing activities during the quarter, revenues came in at $1.83 billion, surpassing the Zacks Consensus Estimate of $1.79 billion. The figure was up 14.4% year over year. Fee revenues increased 14.1% year over year to $1.53 billion.


Jones Lang LaSalle Incorporated Price, Consensus and EPS Surprise

Behind the Headline Numbers

During the quarter, fee revenues from the U.S. were $741.2 million, indicating 18.3% year-over-year increase. Fee revenues in the EMEA (Europe, the Middle East and Africa) region grew 31.8% year over year to $439.1 million, while that in the Asia-Pacific region climbed 9.3% year over year to $279.6 million.

Revenues from the LaSalle Investment Management segment plummeted 42.7% year over year to $72.8 million. At the end of the quarter, assets under management were $57.6 billion, marginally down from $58 billion witnessed at the end of the prior quarter.

Liquidity

Jones Lang exited the reported quarter with cash and cash equivalents of $250.3 million, down from $258.5 million as of Dec 31, 2016. At the end of the second quarter, the company’s net debt was $1.3 billion, down 1 million from the prior-quarter end. This reflects a significant improvement in the company’s working capital management.

Our Viewpoint

Jones Lang continues to invest strategically in a bid to capitalize on market consolidations. Expanding its business scale in the targeted markets has helped the company achieve impressive growth and a decent cash level. We believe such strategic acquisitions will likely help it gain strength to capitalize on the improving market environment.

Armed with a solid balance sheet and healthy debt position, the company remains well poised to retain its growth momentum. In addition, the company’s diversified product and services range, along with extensive knowledge of domestic and international real estate markets will stoke growth.

Nevertheless, stiff competition and unfavorable foreign currency movements are expected to thwart its top-line growth. Additionally, hike in interest rates may lower the growth tempo of the commercial real estate sector and adversely affect Jones Lang’s business activities.

Currently, JLL carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has climbed 27.1% year to date, outperforming 10.8% growth recorded by the industry it belongs to.




Q2 Earnings Schedule of Other Real Estate Companies

We now look forward to the earnings releases of other companies in the real estate sector like City Developments Ltd. CDEVY, LGI Homes, Inc. LGIH and Forestar Group Inc. FOR. While City Developments is scheduled to announce results on Aug 10, LGI Homes and Forestar Group are slated to report Q2 numbers on Aug 8 and Aug 4, respectively.

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