The real estate market is expected to see significant growth in the near future with advances in technology and organizations transforming their operations from offices. Given this scenario, we believe troubled real estate stocks Jones Lang LaSalle (JLL), Comstock Holding Companies (CHCI) and Forestar Group (FOR), which currently appear cheap, are ideal buying opportunities now. Read below to learn more.
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The outbreak of the COVID-19 pandemic had a massive impact on the real estate market as the need for services from these facilities decreased due to government restrictive measures and the complete closure of commercial activities.
However, analysts are optimistic about the long-term prospects for the industry. The global real estate market is expected to grow at a CAGR of 9.6% Reach $5.39 trillion in 2026.
With the advent of digitization in the real estate industry digital apartment search has gained prominence among consumers buying and mortgage-backing homes through virtual features like 3D tours and drone videos.
Additionally, growing demand for single-family homes and organizations resuming operations with office work should support the growth of this industry.
Against this backdrop, troubled real estate stocks Jones Lang LaSalle Incorporated (JLL), Comstock Holding Companies, Inc. (CHCI) and Forestar Group Inc. (TO THE), currently trading at a discount, could be an ideal buy right now.
Jones Lang LaSalle Incorporated (JLL)
JLL, a professional services firm, provides real estate and investment management services in the Americas, Europe, the Middle East, Africa and Asia Pacific.
JLL’s revenue increased 18.9% from the same quarter last year to 4.80 billion for the fiscal quarter ended March 31, 2022.
Net income for the quarter was $145.60 million, an increase of 41.4% year-over-year, while Adjusted EBITDA was $273.60 million, an increase of 43.9% year-over-year corresponds to the same quarter of the previous year.
The company’s adjusted earnings per share were $3.47, up 65.2% from the year-ago quarter.
Analysts expect JLL’s earnings per share for the fiscal quarter ended June 2022 to be $4.44, indicating a year-on-year increase of 5.7%. Also, the company’s year-to-date EPS is expected to rise 3.1% year-over-year to $20.08.
It has an impressive earnings surprise record, beating street EPS estimates in each of the last four quarters.
In terms of forward non-GAAP P/E, JLL currently trades at 7.76x, 74.1% below the industry average of 29.92x. The trailing 12-month price-to-sales multiple of 0.67 is 87.5% below the industry average of 5.35.
JLL’s stock is down 42.2% year-to-date to close the last trading session at $155.76.
JLL’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
The POWR ratings are calculated considering 118 different factors, with each factor being optimally weighted.
JLL also has a B grade in Growth and Value. It is #1 of 44 stocks in the ranking real estate services Industry.
Beyond the above, we also rated JLL for momentum, stability, sentiment, and quality. Get all JLL reviews here.
Comstock Holding Companies, Inc. (CHCI)
CHCI develops, operates and manages mixed-use and transit-oriented properties primarily in the Washington, DC metropolitan area. The company also offers real estate development and management services.
On June 13, CHCI announced the closing of two significant transactions with CP Real Estate Services, LC; a company owned by Christopher Clemente, CEO of Comstock, which aims to strengthen its balance sheet and position the company for future growth.
The first transaction involves the redemption of outstanding shares at a discount, while the second transaction represents the replacement and amendment of the company’s asset management agreement.
CHCI revenue increased 27.6% year over year to $8.73 million in the first quarter of fiscal 2022. Operating income increased 208.1% year over year to $1.37 million, while net income improved 416.4% year over year to $2.01 million.
The company’s net earnings per share rose 340% year over year to $0.22.
In terms of the trailing 12-month price/sell ratio, CHCI is currently trading at 1.15x, 78.5% lower than the industry average of 5.35x. Its trailing 12-month EV/EBIT multiple of 8.13 is 80.8% below the industry average of 42.28.
The stock is down 5.2% year-to-date to close the last trading session at $4.60. Over the past month, however, it has gained 12.3%.
CHCI’s solid fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which equates to Buy in our POWR Ratings system.
The company also has a B grade in value, dynamism, mood and quality. The stock is #5 in the real estate services industry. To obtain CHCI ratings for stability and growth, click here.
Forestar Group Inc. (FOR)
FOR is a United States residential real estate development company. It acquires land, develops the infrastructure for single-family residential communities and sells its completed single-family residential properties to builders.
For the fiscal quarter ended March 31, 2022, FOR’s revenue increased 46.8% year over year to $421.60 million. Net income attributable to FOR increased 68.3% year over year to $47.80 million.
Additionally, net earnings per share were $0.96, up 62.7% from the year-ago quarter.
Street expects FOR’s revenue to improve 31.3% year over year to $410.93 million for the fiscal quarter ended June 2022.
Consensus EPS estimate of $0.88 for the same quarter represents a 48% increase over the same period last year. FOR also beat consensus estimates for the stock for all subsequent four quarters.
In terms of forward non-GAAP P/E, FOR currently trades at 3.63x, 87.9% lower than the industry average of 29.92x. Its trailing 12-month EV/EBIT multiple of 5.62 is 86.7% below the industry average of 42.28.
The stock is down 38.1% year-to-date to close the last trading session at $13.46.
FOR has an overall rating of B, which translates to Buy in our proprietary rating system. The stock is rated A for growth and sentiment and B for value. It is ranked 4th in the same industry. click here to view additional POWR ratings for Quality, Momentum, and Stability for FOR.
JLL shares closed at $167.02 on Friday, up $11.26 (+7.23%). Year-to-date, JLL is down -37.99% versus a -22.73% gain in the benchmark S&P 500 over the same period.
About the Author: Komal Bhattar
Komal’s passion for the stock market and financial analysis led her to pursue investment research as a career. Their fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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