Analyst Note| Michael Wong, CFA, CPA |
Narrow-moat-rated Jones Lang LaSalle posted a solid set of numbers in the second quarter, comfortably beating the FactSet consensus estimate of $1.73 per share with a reported adjusted EPS of $4.20. Fee revenue has fully recovered to beyond prepandemic levels as the company reported second-quarter fee revenue of $1.8 billion, a 41% increase on a year-over-year basis and an 11% increase from the second quarter of 2019. Adjusted EBITDA also came in strong for the current quarter at $332 million, 46% higher than the second quarter of 2019. Adjusted EBITDA margin calculated on a fee-revenue basis expanded significantly in the current quarter and was recorded at 18.5% compared with 8.3% in the second quarter of 2020 and 13.9% in the second quarter of 2019. The margin expansion came on the back of strong revenue growth, particularly in transaction-based service lines, cost rationalizations, and higher equity earnings driven by JLL Technologies investments and LaSalle. Management increased its adjusted EBITDA margin guidance to 16%-19% for the full year, up from 14%-16% previously. The results are largely in line with our long-term thesis, as we believe that JLL is a beneficiary of various favorable structural shifts in the commercial real estate industry. We do not plan to materially change our $191 fair value estimate for the company as we fully incorporate second-quarter results.