Balanced View on Jones Lang LaSalle - Analyst Blog

On Mar 14, 2014, we issued an updated research report on Jones Lang LaSalle Inc. JLL.

On Jan 28, aided by solid growth in revenues, Jones Lang LaSalle reported fourth-quarter 2013 adjusted earnings per share of $3.33, substantially ahead of the Zacks Consensus Estimate of $3.10 per share. Also, it came 28% above the year-ago quarter earnings of $2.60 per share.

Quarterly results benefited from decent growth in fee revenues, driven by Capital Markets & Hotels and Property & Facility Management lines as well as improved momentum in leasing.

Jones Lang has a broad range of real estate product and services as well as an extensive knowledge of domestic and international real estate markets, enabling it to operate as a single-source provider of real estate solutions. In 2013, the company generated record fee revenue of $4 billion across its segments, reflecting a 12% year-over-year increase in local currency. In the fourth quarter, the company was also selected by Gemalto to act as adviser for its worldwide real estate operations.

Jones Lang's increased credit facility along with a solid balance sheet is expected to provide the wherewithal to carry on investing in growth drivers going forward. In 2013, the company lowered its net debt by $101 million compared with a year ago to $437 million. Encouragingly, this represents the company's second successive year of lowering its debt by over $100 million.

However, structural and political issues have led to inconsistent and slow paced development of certain Asian markets, such as China and India. Moreover, Brazil continues to be challenged, particularly in its leasing markets. Also, cut-throat competition and unfavorable foreign currency movements remain our concerns.

Over the last 30 days, the Zacks Consensus Estimate for 2014 remained stable at $7.25 per share while that for 2015 moved north by 0.6% to $8.21 per share. Jones Lang currently has a Zacks Rank #2 (Buy).

Stocks That Warrant a Look

Some better-ranked stocks in the real estate operations industry include HFF, Inc. HF, FirstService Corp. FSRV and Reis, Inc. REIS. While HFF carries a Zacks Rank #1 (Strong Buy), FirstService and Reis have a Zacks Rank #2 (Buy).