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What You Can Learn From Jones Lang LaSalle Incorporated's (NYSE:JLL) P/E
When close to half the companies in the United States have price-to-earnings ratios (or "P/E's") below 18x, you may consider Jones Lang LaSalle Incorporated (NYSE:JLL) as a stock to potentially avoid with its 27.9x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's as high as it is.
Recent times have been advantageous for Jones Lang LaSalle as its earnings have been rising faster than most other companies. The P/E is probably high because investors think this strong earnings performance will continue. If not, then existing shareholders might be a little nervous about the viability of the share price.
View our latest analysis for Jones Lang LaSalle
Want the full picture on analyst estimates for the company? Then our free report on Jones Lang LaSalle will help you uncover what's on the horizon.How Is Jones Lang LaSalle's Growth Trending?
The only time you'd be truly comfortable seeing a P/E as high as Jones Lang LaSalle's is when the company's growth is on track to outshine the market.
If we review the last year of earnings growth, the company posted a terrific increase of 110%. However, this wasn't enough as the latest three year period has seen a very unpleasant 35% drop in EPS in aggregate. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
Turning to the outlook, the next three years should generate growth of 26% per annum as estimated by the eight analysts watching the company. Meanwhile, the rest of the market is forecast to only expand by 11% each year, which is noticeably less attractive.
In light of this, it's understandable that Jones Lang LaSalle's P/E sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.
What We Can Learn From Jones Lang LaSalle's P/E?
It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
We've established that Jones Lang LaSalle maintains its high P/E on the strength of its forecast growth being higher than the wider market, as expected. Right now shareholders are comfortable with the P/E as they are quite confident future earnings aren't under threat. Unless these conditions change, they will continue to provide strong support to the share price.
Plus, you should also learn about this 1 warning sign we've spotted with Jones Lang LaSalle.
If P/E ratios interest you, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About NYSE:JLL
Jones Lang LaSalle
Operates as a commercial real estate and investment management company.