Jones Lang Lasalle Inc. (JLL) reported net income of $44 million or 99 cents per share in the second quarter of 2011, which compared favorably with $32 million or 72 cents per share delivered in the year-earlier quarter.
Adjusted net income stood at $50 million or $1.12 per share in the second quarter of 2011 versus $37 million or 83 cents per share in the prior-year quarter. Reported earnings surpassed the Zacks Consensus Estimate by two cents.
We cover below the results of the recent earnings announcement, as well as the subsequent analyst estimate revisions and the Zacks ratings for the short and long-term outlook on the stock.
Second Quarter Review
Revenues in the reported quarter were $845 million as against $680 million delivered in the year-ago quarter.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in second quarter 2011 came in at $94 million, up from $78 million in the year-ago quarter.
At the end of the quarter, Jones Lang had a net debt of $832 million, arising from the King Sturge acquisition in the quarter. Outstanding debt on the long-term credit facility was $444 million at quarter end.
Read our full coverage on this earnings report: Jones Lang Beats Estimates.
Earnings Estimate Revisions –– Overview
Fiscal 2011 earnings estimates for JLL have moved in both directions since the earnings release, which implies that the analysts are cautious regarding the current fiscal performance of the company. Let’s dig into the earnings estimate in details.
Agreement of Estimate Revisions
For the upcoming quarter, 1 out of the 7 analysts covering the stock revised the estimate upward, while 3 analysts lowered the same in the last 30 days. Similarly, for fiscal 2011, earnings estimates were increased by 1 out of the 7 analysts covering the stock while 3 analysts moved in the opposite direction over the last 30 days.This indicates that fiscal earnings estimates are skewed in the negative direction.
Magnitude of Estimate Revisions
Earnings estimates for the upcoming quarter decreased from $1.27 per share to $1.20 per share in the last 30 days. Likewise, earnings estimates for fiscal 2011 plummeted from $4.90 to $4.77 per share, which implies that despite the gradual improvement in fundamentals, estimates still remain challenged by broader economic trends.
Moving Forward
Jones Langhas a broad range of real estate product and services and an extensive knowledge of domestic and international real estate markets, which enables it to operate as a single-source provider of real estate solutions.
Jones Lang continually invests in industry-leading research to identify emerging trends and anticipate future conditions to respond to the shifting market and business trends of its clients. This facilitates the development of new investment products and services tailored to meet the specific investment goals and objectives of its clients, thereby maintaining profitable long-term relationships during challenging market conditions.
However, Jones Lang faces stiff competition from international, regional, and local players in the market due to which it has to continually invest in value drivers that act as key differentiators. Consequently, the company is continually under severe stress to maintain its profitability, which undermines its growth potential.
Jones Lang currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, CB Richard Ellis Group, Inc. (CBG) currently holds a Zacks #4 Rank, which translates into a short-term Sell rating.
About Earnings Estimate Scorecard
Len Zacks, PhD in mathematics from MIT, proved over 30 years ago that earnings estimate revisions are the most powerful force impacting stock prices. He turned this ground breaking discovery into two of the most celebrating stock rating systems in use today. The Zacks Rank for stock trading in a 1 to 3 month time horizon and the Zacks Recommendation for long-term investing (6+ months). These “Earnings Estimate Scorecard” articles help analyze the important aspects of estimate revisions for each stock after their quarterly earnings announcements. Learn more about earnings estimates and our proven stock ratings at http://www.zacks.com/education/
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