On Jun 14, 2013, we reiterated our long-term recommendation on
Jones Lang LaSalle Inc.
) at Neutral based on its top-line improvement, market share
expansion, decent balance sheet and dividend hike as well as
better-than-expected first-quarter results. However, we remain
concerned about a relative decline in real estate fundamentals
and stiff competition.
Why the Neutral Stance?
Jones Lang LaSalle's first quarter 2013 adjusted earnings of 36
cents per share substantially surpassed the Zacks Consensus
Estimate of 21 cents per share. However, it fell short of the
year-ago quarter earnings of 50 cents per share. Though quarterly
results benefited from decent growth in revenues yet higher
expenses acted as a dampener.
The Zacks Consensus Estimate for 2013 moved north by 0.8% to
$6.35 over the last 30 days. Also, for 2014, the Zacks Consensus
Estimate went up by only 0.5% to $7.32 per share over the same
time frame. The stock currently has a Zacks Rank #3 (Hold).
With an investment grade balance sheet and manageable debt
position, the company is set to continue with its improving
performance in the coming quarters. It is actively capitalizing
on market consolidations. Leveraging its superior operating
platform and market share expansion, the company's adjusted
operating income increased almost five times over the last 10
The deal with
HSBC Holdings plc.
) also augurs well. Encouragingly, its board of directors
declared a 10% hike in its semi annual dividend, demonstrating
the company's confidence in its cash generating capabilities.
However, with a relative decline in real estate fundamentals, the
demand for Jones Lang's services has fallen compared to the
pre-recession levels, which is a cause of concern. Moreover, the
company faces stiff competition from international, regional, and
local players in the market.
Other REIT Stocks to consider
Some better performing REITs include
E-House (China) Holdings Limited
) having a Zacks Rank #1 (Strong Buy) while
Desarrolladora Homex, SAB de CV
) carries a Zacks Rank #2 (Buy).
E-HOUSE CHINA (EJ): Free Stock Analysis
HSBC HOLDINGS (HBC): Free Stock Analysis
DESARROLLADORA (HXM): Free Stock Analysis
JONES LANG LASL (JLL): Free Stock Analysis
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