The real estate market is expected to experience significant growth in the near term with technological advancements and organizations renewing their operations from offices. Given this scenario, we think the precipitated real estate stocks Jones Lang LaSalle (JLL), Comstock Holding Companies (CHCI) and Forestar Group (FOR), which currently look cheap, could now be ideal buys. Read below for more information.
The outbreak of the COVID-19 pandemic acted as a huge barrier to the real estate market as the need for services offered by these establishments declined due to government restrictions and the complete shutdown of commercial activities.
However, analysts are optimistic about the long-term outlook for the sector. The global real estate market is expected to grow at a CAGR of 9.6% to reach $5.39 trillion by 2026.
As digitization enters the real estate sector, digital house hunting has gained traction among consumers buying homes or mortgages through virtual capabilities such as 3D tours and drone videos.
In addition, the growing demand for single-family homes and organizations resuming their activities with work from the office should drive the growth of this sector.
Given the background, precipitated real estate stocks Jones Lang LaSalle Incorporated (JLL), Comstock Holding Companies, Inc. (CHCI) and Forestar Group Inc. (FOR) that appear to be trading at a discount right now could be ideal buys. 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% year-over-year to $4.80 billion in the fiscal quarter ended March 31, 2022.
Net profit for the quarter came in at $145.60 million, reflecting a 41.4% year-over-year increase, while Adjusted EBITDA was $273.60 million, up 43.9% from the same quarter last 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 come in at $4.44, indicating a 5.7% year-over-year increase. Also, the company’s earnings per share are expected to grow 3.1% year-over-year to $20.08 in the current fiscal year.
It has a distinguished history of earnings surprises, as it surpassed Street EPS estimates in each of the following four quarters.
In terms of its forward non-GAAP P/E, JLL is currently trading at 7.76x, 74.1% below the industry average of 29.92x. Its price/sales multiple of 0.67 over 12 months is 87.5% lower than the industry average of 5.35.
Shares of JLL are down 42.2% so far to close out the latest trading session at $155.76.
JLL’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which translates to Buy in our proprietary rating system.
The POWR Ratings are calculated by taking into account 118 different factors, with each factor being optimally weighted.
JLL also has a B degree in Growth and Value. It ranks #1 out of 44 stocks in the real estate services industry.
In addition to what was mentioned above, we also rated JLL on momentum, stability, sentiment and quality. See all JLL reviews here.
Comstock Holdings, Inc. †CHCI†
CHCI develops, operates, and manages mixed-use and transportation real estate primarily in the Washington, DC metropolitan area. The company also provides real estate development and management services.
On June 13, CHCI announced the completion of two major transactions with CP Real Estate Services, LC; an entity owned by Christopher Clemente, the CEO of Comstock, which is expected to strengthen its balance sheet and position the company for future growth.
The first transaction represents the repurchase of outstanding shares at a discount, while the second transaction represents the replacement and amendment of the company’s asset management agreement.
CHCI’s revenue grew 27.6% year over year to $8.73 million in the fiscal first quarter of 2022. Operating income grew 208.1% from a year ago value to $1.37 million, while year-over-year net income improved 416.4% to $2.01 million.
The company’s net earnings per share were up 340% from a year ago to $0.22.
In terms of 12 month price/sale over the last 12 months, CHCI is currently trading at 1.15x, 78.5% below the industry average of 5.35x. Its 12-month EV/EBIT multiple of 8.13 is 80.8% lower than the industry average of 42.28.
The stock is down 5.2% so far to close out its latest trading session at $4.60. However, it rose 12.3% in the past month.
CHCI’s solid fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which is equivalent to Buy in our POWR Ratings system.
The company also ranks B in value, momentum, sentiment and quality. The share is number 5 in the Real Estate Services sector. Click here to get CHCI’s Stability and Growth ratings.
Forestar Group Inc. †IN FRONT OF†
FOR operates as a residential development company in the United States. It acquires land, develops infrastructure for single-family homes and sells its finished single-family homes to homebuilders.
For the fiscal quarter ended March 31, 2022, FOR revenue grew 46.8% year over year to $421.60 million. Net income attributable to FOR grew 68.3% from a year ago value to $47.80 million.
In addition, net earnings per share were $0.96, up 62.7% from the same quarter last year.
Street expects FOR revenues for the fiscal quarter ended June 2022 to improve 31.3% year over year to $410.93 million.
The consensus EPS estimate of $0.88 for the same quarter represents a 48% increase over the same period last year. FOR also beat consensus EPS estimates in all four of its last quarters.
In terms of its forward non-GAAP P/E, FOR is currently trading at 3.63x, 87.9% below the industry average of 29.92x. Its 12-month EV/EBIT multiple of 5.62 is 86.7% lower than the industry average of 42.28.
The stock is down 38.1% so far to close out its latest 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 a B for value. In the same industry, it ranks #4. Click here for additional POWR quality, momentum and stability ratings for FOR.
JLL shares closed at $167.02 Friday, up $1.26 (+7.23%). Year-to-date, JLL is down -37.99%, compared to a -22.73% rise in the benchmark S&P 500 index over the same period.
About the Author: Komal Bhattar
Komal’s passion for the stock market and financial analysis led her to pursue her career in investment research. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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