Real estate firm JLL (NYSE: JLL) reported Q4 CY2024 results exceeding the market’s revenue expectations, with sales up 15.8% year on year to $6.81 billion. Its non-GAAP profit of $6.15 per share was 2.3% above analysts’ consensus estimates.

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"JLL delivered strong fourth-quarter and full-year 2024 financial results, led by an acceleration in transactional activity and sustained growth in resilient revenues. Throughout 2024, our focus on operating efficiency helped drive significant margin expansion and free cash flow generation," said Christian Ulbrich, JLL CEO.

Company Overview

Founded in 1999 through the merger of Jones Lang Wootton and LaSalle Partners, JLL (NYSE: JLL) is a company specializing in real estate advisory and investment management services.

Real Estate Services

Technology has been a double-edged sword in real estate services. On the one hand, internet listings are effective at disseminating information far and wide, casting a wide net for buyers and sellers to increase the chances of transactions. On the other hand, digitization in the real estate market could potentially disintermediate key players like agents who use information asymmetries to their advantage.

Sales Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, JLL grew its sales at a sluggish 5.4% compounded annual growth rate. This was below our standard for the consumer discretionary sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. JLL’s annualized revenue growth of 6% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak.

JLL also breaks out the revenue for its three most important segments: Work Dynamics, Markets Advisory, and Capital Markets, which are 66.9%, 19.5%, and 10.4% of revenue. Over the last two years, JLL’s Work Dynamics (operational workflows) and Markets Advisory (real estate insights) revenues averaged year-on-year growth of 10.5% and 1.1% while its Capital Markets revenue (financial transactions) averaged 7.3% declines.

This quarter, JLL reported year-on-year revenue growth of 15.8%, and its $6.81 billion of revenue exceeded Wall Street’s estimates by 1.4%.

Looking ahead, sell-side analysts expect revenue to grow 10.1% over the next 12 months. While this projection suggests its newer products and services will fuel better top-line performance, it is still below average for the sector.

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Cash Is King

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

JLL has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 2.2%, lousy for a consumer discretionary business.

JLL’s free cash flow clocked in at $868.1 million in Q4, equivalent to a 12.7% margin. This result was good as its margin was 1.2 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends carry greater meaning.

Key Takeaways from JLL’s Q4 Results

It was good to see JLL top analysts’ revenue, EPS, and EBITDA expectations this quarter despite underperformance in its Capital Markets segment. Overall, this quarter had some key positives. The stock remained flat at $279.71 immediately following the results.

Is JLL an attractive investment opportunity at the current price? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.