Yahoo Finance Jones Lang LaSalle (JLL) Down 19.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Jones Lang LaSalle (JLL). Shares have lost about 19.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Jones Lang LaSalle due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Jones Lang LaSalle Q4 Earnings Miss Mark, Revenues Beat
JLL reported decent performance in annuity-based businesses like Workplace Management under Work Dynamics and Property Management under Markets Advisory.
However, transaction-based businesses, specifically the Capital Markets and Leasing under Markets Advisory, were hit by higher interest rates and rapid changes in the economic sentiment globally.
The real estate services company reported fourth-quarter 2022 adjusted EPS of $4.36, lagging the Zacks Consensus Estimate of $4.47. The reported figure declined 49.6% from the prior-year quarter’s $8.66.
Revenues totaled $5.60 billion, falling 5.7% from the year-ago quarter’s $5.94 billion. Nonetheless, the figure surpassed the Zacks Consensus Estimate of $5.33 billion.
The quarterly adjusted EBITDA margin, calculated on a fee-revenue basis, fell to 15.3% (USD) from 22.6% in 2021 due to a decrease in equity earnings, fall in higher-margin transaction-based revenue, higher fixed compensation expense and wage inflation over the trailing 12 months.
Segment-Wise Performance
During the fourth quarter, the Markets Advisory segment’s revenues and fee revenues came in at $1.18 billion and $915.3 million, respectively, reflecting a fall of 13% and 17% (in USD) year over year. Lower transaction volume across asset types and a decrease in average deal size, mainly in the office sector, led to a fall in Leasing fee revenues, which was the prime reason for the decline in Markets Advisory revenues and fee revenues.
Revenues and fee revenues for the Capital Markets segment were $607.9 million and $598.9 million, respectively, decreasing 38% and 37% (in USD) year over year. The fall was due to lower Investment Sales and Debt Advisory fees as rising interest rates and economic uncertainty hurt market transaction volumes and elongated the deal-cycle time.
JLL’s Work Dynamics segment reported revenues and fee revenues of $3.63 billion and $534.3 million, respectively, up 7% and 6% (in USD) year over year. The rise in revenues and fee growth was attributable to new client wins and the expansion of existing global mandates in Workplace Management services. The continued momentum in project demand from the return-to-office movement and lower pandemic-related restrictions drove the Project Management services’ growth.
JLL Technologies segment reported revenues and fee revenues of $57.3 million and $54.2 million, respectively, rising 29% and 35% (in USD) from the prior-year quarter levels. Backed by new customers and growth from existing customers in software and solutions offerings, JLL Technologies' organic fee revenues increased 21% year over year.
The revenues and fee revenues in the LaSalle segment fell 27% and 29% (in USD) year over year to $118.7 million and $11.4 million, respectively. The rise in advisory fees was driven by strong capital raising and a rise in the fair value of assets under management over the trailing 12 months. However, greater economic uncertainty and lower annual valuation gains in a U.S. fund slowed down transaction activity and led to lower incentive fees associated, offsetting the growth in advisory fees.
As of Dec 31, 2022, LaSalle had $79.1 billion of real estate AUM, down from $81.7 billion as of Sep 30, 2022. This resulted from the decrease in foreign currency and dispositions and withdrawals, partially offset by the rise in acquisitions and net valuation.
Balance Sheet
JLL exited fourth-quarter 2022 with cash and cash equivalents of $519.3 million, up from $489.4 million as of Sep 30, 2022.
As of Dec 31, 2022, the net leverage ratio was 1.0, up from 1.1 as of Sep 30, 2022, and 0.2 as of Dec 31, 2021. The corporate liquidity was $2.6 billion as of the same date.
The company did not repurchase any shares during the fourth quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -10.13% due to these changes.
VGM Scores
Currently, Jones Lang LaSalle has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Jones Lang LaSalle has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Jones Lang LaSalle Incorporated (JLL) : Free Stock Analysis Report
