Stock Spotlight

Real estate means real growth for JLL

Recent Price
$133
Dividend (estimated)
$0.46
Yield (estimated)
0.3%
P/E Ratio
19
Shares (millions)
45
Long-Term Debt as % of Capital
23%
52-Week Price Range
$136.49 - $80.86

When AstraZeneca ($74; AZN) decided to move its Australian headquarters, Jones Lang LaSalle ($133; JLL) brokered the sale of the building. When Volkswagen ($45; VLKAY) decided to lower costs by moving some of its operations to Eastern Europe, Jones Lang identified Poland as the best location for a new manufacturing plant and negotiated government tax incentives for the carmaker.

Jones Lang (also called JLL) provides services and investment management related to real estate. Its annual revenue rose at least 9% in each of the past four years, a period of weakness in the commercial real estate market.

Leasing activity has begun to pick up, with corporate clients once again looking to expand operations and rental rates for top-tier office space rising in nearly all of the company's geographic markets. Sales surged 25% in the first half of 2014, and the consensus anticipates 15% growth in the final six months of the year.

The stock looks timely, with Quadrix Momentum and Earnings Estimates scores above 90. Jones Lang is a Buy and a Long-Term Buy.

Business breakdown

Operating in more than 75 countries, Jones Lang enjoys broad geographic exposure to the commercial real estate market. It derives close to 60% of revenue outside of the U.S., with about 15% of revenue coming from the U.K. and 6% each from Australia and China.

Real estate services account for nearly 94% of fee revenue, which excludes vendor and subcontractor costs. These services include property management, project development, real estate financing, and consulting. Jones Lang also operates a leasing agency, which has benefited from both increased activity and market-share gains this year.

The investment-management business (7% of fee revenue) attracts institutional clients seeking exposure to real estate. The unit hopes to broaden its appeal to retail investors through publicly traded real estate investment trusts (REITs). Assets under management rose 5% to $50.0 billion in the first six months of the year, lifted by acquisitions and price appreciation.

Jones Lang's fee revenue has advanced at an annualized rate of 16% over the past decade, with 12% organic growth and the remainder from acquisitions. The company has completed more than 50 purchases since 2003, with many of these deals overseas. Jones Lang paid a total of $20 million for three acquisitions in the first half of 2014. The company expects mergers to contribute one-fourth of its long-term sales growth.

Conclusion

Shares have returned 31% so far in 2014, pushing the Value score down to 57. But the stock still looks reasonably priced, given its robust growth projections. The consensus sees per-share profits rising 15% in the 12 months ending June 2015, stronger than the average of 11% for real estate management and development stocks in the S&P 1500 Index. Yet Jones Lang shares trade at 16 times estimated year-ahead earnings, the lowest forward P/E ratio in its peer group.

An annual report for Jones Lang LaSalle Inc. is available at 200 E. Randolph Drive, Chicago, IL 60601; (312) 782-5800; www.jll.com.


 

Jones Lang LaSalle

 
Quarter
Per-Share Earnings
Sales Change
Quarterly Price Range
P/E Ratio Range
Jun '14
$1.68
vs.
$1.15
29%
$126.96
-
$112.57
20 - 18
Mar '14
0.39
vs.
0.36
21%
125.29
-
101.17
20 - 16
Dec '13
3.33
vs.
2.60
21%
103.23
-
80.86
18 - 14
Sep '13
1.49
vs.
1.23
17%
97.38
-
81.23
18 - 15

 
Year (Dec.)
Sales (Bil.)
Per-Share Earnings*
Per-Share Dividend
52-Week Price Range
P/E Ratio Range
2013
$4.46
$6.32
$0.44
$103.23
-
$80.86
16 -13
2012
3.93
5.48
0.40
87.52
-
61.39
16 - 11
2011
3.58
4.83
0.30
107.84
-
46.01
22 - 0
2010
2.93
3.77
0.20
89.75
-
56.77
24 - 15

 
Quadrix Scores†
Overall
Momentum
Value
Quality
Financial Strength
Earnings Estimates
Performance
95
98
61
89
40
93
84

* Earnings exclude special items. NM Not Meaningful.
† Quadrix® scores are percentile ranks, with 100 the best.
e Dividend and yield estimated.

More Investment Newsletters and Services

Drip Investor

DRIP Investor — how you can buy dividend-paying stocks without a broker.

Visit us at DRIP Investor, your source for dividend reinvestment plans.

Lazy Investor

The Lazy Investor — free weekly e-letter that delivers market updates and stock market information via email.

Visit us at The Lazy Investor, our free investment newsletter.

Horizon Investment

Horizon — registered investment advisor seeks to provide investors at all stages the ability to build, preserve and enjoy wealth.

Visit us at Horizon Investment Services to get started in an investment program that's right for you.

Upside

Upside — discovers today's small and midcap stocks poised to be tomorrow's Blue Chip leaders.

Visit us at Upside, your guide to the best buys in small and midcap stocks.

Current Hotline

Friday, September 12, 2014

The S&P 500 Index and Dow Jones Industrial Average have closed higher in each of the last five weeks

Read More from the Hotline

Stock Spotlight

Real estate means real growth for JLL

Wednesday, September 10, 2014

When AstraZeneca ($74; AZN) decided to move its Australian headquarters, Jones Lang LaSalle ($133; JLL) brokered the sale of the building. When...

Read More from Stock Spotlight

Individual Stock Reports

ISRs make stock research easy!

Perhaps the most valuable two page reports available anywhere.

All the data you would normally have to plow through years of 10-K filings, earnings reports, and reams of market data to assemble — yours all in one concise report.

ISRs contain our proprietary Quadrix scores — find out how we rate all the stocks in the S&P 500.

Visit us at individualstockreports.com